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http://www.archive.org/details/casesonlawofpublOOburd 


CASES  ON  THE  LAW 

OF 

PUBLIC  SERVICE 


CASES  ON  THE  LAW 

OF 

PUBLIC  SERVICE 


BY 

CHARLES  K.  BURDICK 

Professor  of  the  Law  of  Public  Service  in 
Cornell  University,  College  of  Law 


BOSTON 

LITTLE,  BROWN,  AND  COMPANY 

1916 


Copyright,  1916, 
By  Little,  Brown,  and  Compant. 


All  rights  reserred 

r 


{^rtnttts 

S.   J.    I'ABniLL  &    Co.,   HodTON,  U.S.A. 


CONTENTS 

CHAPTER  I 

PAGES 

THE  BASES  OF  THE  DUTIES  OF  PUBLIC  SERVICE   ...  1-86 

§  1.  The  Common  Callings 1-10 

§  2.  Exercise   of    Fsanchises 10-  30 

§  3.  Legislation 31-  65 

§  4.  Economic  Monopoly 66-  80 

CHAPTER  II 

THE  SERVICE  TO  BE  RENDERED 87-167 

§  1.  What  Service  Must  Be  Rendered 87-135 

§  2.  Who  Must  Be  Served  and  Excuses  for  Failure  to  Serve  135-160 
§  3.  The  Right  of  Public  Service  Companies  to  Serve  Them- 
selves            160-167 

CHAPTER  III 
THE  RIGHT  TO  MAKE  RULES  FOR  THE  SERVICE    .      .      .   168-211 

CHAPTER  IV 

RATES 212-334 

§  1.  Rates  Fixed  by  the  One  Engaged  in  Public  Service   .   212-220 

§  2.  The  Power  of  the  State  to  Fix  Rates 220-237 

§  3.  Limitations  on  the  Power  of  the  State  in  Rate  Regula- 
tion         237-265 

§  4.  Operating  Expenses  and  Maintenance         265-288 

§  5.  The  Capital  Upon  Which  a  Return  Should  Be  Earned  288-326 
§  6.  What  Rate  of  Return  Shouxd  Be  Allowed     ....   326-334 

CHAPTER  V 
DISCRIMINATION 335-392 

CHAPTER  VI 

DUTY  TO  FURNISH  ADEQUATE   FACILITIES 393-444 


^^Q,0..^  Ck 


CONTENTS. 

CHAPTER  VII 

PAGES 

WITHDRAWAL  FROM  PUBLIC  SERVICE 445-479 

APPENDIX 
THE  ACT  TO  REGULATE  COMMERCE  AS  AMENDED      .      .  481-528 
ELKINS  ACT 528-533 

INDEX 535-544 


TABLE  OF  CASES. 


Abbott  V.  Johnson  G.  &  K.  H. 

R.  R.  Co. 
Adams  Exp.  Co.  v.  State 
Albany  Tel.  Co.  v.  Terry 
Allen  V.  Cape  Fear  &  Y.  V. 


PAGE 

n.  471 

n.  375 

129 

n.  375 


R.  R.  Co. 

V.  St.  L.,  I.  M.  &  S.  R. 

Co.  n.  257 

Allnutt  V.   Inglis  24,  n.  34 

American  R.  Tel.  Co.  v.  Conn. 

Tel.  Co.  n.  134 

American  W.  W.  Co.  v.  State  ??.  20 
Ames  V.  Union  Pac.  Ry.  Co.  288 
Ammons  v.  Railroad  193 

Anonymous  1,     n.  3,  445 

Ansell  V.  Waterhouse  n.  G 

Arkansas   Rate   Case,  In  re 

269,  n.  271 
Atchison,  T.  &  S.  F.  R.  Co.  v. 

Denver    &.    N.    O.    R.    Co. 

n.  103,  107 
Attorney-General    v.    Haver- 
hill G.  L.  Co.  n.  471 
V.  Simpson  n.  30 
Atwater   v.   Delaware,   L.   & 

W.  R.  R.  Co.  n.  139 

Ayres  v.  Chicago  &  N.  W.  Ry. 

Co.  362 

Bailey  v.  Fayette  G.  &  E.  Co.  n.  384 
Baldwin  v.  Chicago,  R.  I.  & 

P.  Ry.  Co.  «.  103 

Baltimore  Ry.  Co.  v.  Williin- 

son  n.  176 

Baltimore  &  O.  R.  R.  Co.  v. 

Adams  Exp.  Co.  n.  375 

Barker  v.  Midland  Ry.  Co.  n.  128 
V.  Railroad  Co.  n.  200 

Barney  v.  Oyster  Bay  S.  B. 

Co.  n.  128 

Beadell,  In  re  n.  128 

Bell  Telephone  Co.  v.  Com- 
monwealth n.  10 
Bennett  v.  Dutton  n.  149 
Billings  JNIut.  T.  Co.  v.  Rocky 

Mountain  T.  Co.  n.  130 

Birney  v.  N.  Y.  &  W.  T.  Co.  n.  190 
Blackstone  v.  Railroad  Co.  n.  141 
Boerth   v.   Detroit  City   Gas 

Co.  383 


PAGE 

Bogard's    Adm'r.    v.    Illinois 

Cent.  R.   R.  Co.  146 

Boston  &  Albany  Ru  R.  Co.  v. 

Brown  n.  128 

Boston  &  Maine  R.  R.  Co.  v. 

Sullivan  n.  128 

Bright  V.  Western  Un.  T.  Co.  n.  206 
Bradshaw    v.    South    Boston 

R.  R.  Co.  n.  198 

Brass  v.  North  Dakota  49 

Brown  v.  Brandt  136,  n.  394 

Brunswick  &  T.  W.  Dist.  v. 

Maine  W.  Co.  217 

Brymer  v.  Butler  W.  Co. 

219,  271,  323 
Budd  V.  New  York  n.  47 

Buffalo   Gas   Co.   v.   City  of 

Buffalo  n.  301 

Bullard    v.    American    Exp. 

Co.  104,  n.  205 

Bullock  V.  Del.,  L.  &  W.  R. 

R.  Co.  n.  195 

Burge  V.  Ga.  Ry.  &  El.  Co.         198 
Butchers  &  D.   S.   Y.   Co.  v. 

Louisville  &  N.  R.  R.  Co.   n.  436 

California   v.   Pacific    R.    Ru 
Co.  n.  11 

California  P.  Wks.  v.  Atl.  «& 
Pac.  R.  R.  Co.  n.  101 

Calye's  Case  n.  136 

Camblos  v.  Phil.  &  R.  R.  R. 
Co.  _  n.  380 

Campbell  v.  Western  Un.  T. 
Co.  n.  205 

Canada  So.  Ry.  Co.  v.  Inter- 
national Bridge  Co.  n.  214 

Carr   v.    Northern   Pac.    Ry. 

Co.  H.  355 

Carter  v.  Commonwealth        n.  466 

Cedar   Rapids   G.    L.    Co.    v. 

Cedar  Rapids  n.  257,  274,  n.  307 

Cedar     Rapids     W.     Co.     v. 

Cedar   Rapids  n.  276,  326 

Central  of  Georgia  Ry.  Co.  v. 
Motes  191 

V.  Railroad  Com.  of  Ala.      222 

Central  Un.  Tel.  Co.  v.  State     405 

Charleston  N.  G.  Co.  v.  Lowe  n.  20 

Chase  v.  N.  Y.  C.  R.  R.  Co.    «.  195 


Vlll 


TABLE   OF    CASES. 


PAGE 

Cheney  v.  Boston  &  M.  R.  R. 
Ck).  175 

Chesapeake  &  O.  Ry.  Co.  v. 
Hall  n.  101 

Chesapeake  &   P.   T.   Co.   v. 

Bait.  &  O.  T.  Co.  n.  134 

Chicaiso  &  A.   R.   R.   Co.   v. 
Eriekson  n.  101 

V.  People  n.  423 

V.  Suffern  n.  433 

Chicago.  B.  &  Q.  R..  R.  Co.  v. 

Curtis  n.  103 

V.  Iowa  220 

Chicago   &   G.    T.    R.   Co.   v. 
Wellman  n.  2,57,  268,  n.  331 

Chicago.  M.  &  St.  P.  Ry.  Co. 

V.  Minnesota  n,  331 

V.  Smith  n.  273 

V.   Tompkins     n.  257,  265,  324 

V.  Wallace  n.  102 

Chicago  &  N.  W.  Ry.  Co.  v. 

Dey  272,  n.  328 

Chicago,  R.  I.  &  P.  Ry.  Co.  v. 
Nebraska  Ry.  Com.  n.  423 

Cincinnati,  H.  &  D.  R.  R.  Co. 
V.  Bowling  Green       «.  20,  n.  76 

Citizens  Bank  v.   Nantucket 
S.  S.  Co.  89 

City  of  Appleton  v.  Appleton 

W.  W.  Co.  n.  310 

City  of  Cleveland  v.  Cleve- 
land C.   Ry.   Co.  n.  260 

City  of  Erie  v.  Erie  G.  &  M. 
Co.  n.  278 

City  of  Gainesville  v.  Gaines- 
ville G.  &  E.  P.  Co.  464 

City    of    Jackson    v.    Ander- 
son n.  399 

City  of  Minneapolis  v.  Min- 
neapolis  St.   Ry.   Co.  259 

City  of  Potwin  I'lace  v.  To- 
peka   Ry.   Co.  n.  456,   n.  461 

Citj-  of  Ripon  v.  Ripon  L.  & 
W.  Co.  n.  306,  n.  .307 

Cleveland  C.  C.  &  St.  L.  Ry. 
Co.  V.  Henry  102 

V.  Perishow  n.  139 

Coal  &  Coke  Ry.  Co.  v.  Con- 

loy  &  Avis  277 

Cohurn  r.  Railway  Co.  n.  176 

Collier  v.  Langan  T.  S.  &  M. 
Co.  „.  94 

(Vimmercial  U.  T.  Co.  v.  New 
England  T.  &  T.  Co.  n.  10,  n.  134 

Conimonwoalth  v.  Carey        v.  128 

V.  Fitchl)iirg  R.  R.  Co.     n.  461 

V.  Louisville  &  N.  R.  R. 

Co.  n.  .384 

V.  Power  «.  128 


PAGE 

Connell  v.  Louisville  Tob.  W. 

Co.  n.  57 

Connors  v.  Cunard  S.  S.  Co.  n.  147 
Consolidated  Gas  Co.  v.  City 

of  New  York  n.  308 

Cook  &  Wheeler  v.  Chicago, 

R.  I.  &  P.  Ry.  Co.  341 

Coppin  V.  Braithwaite  n.  149 

Corporation  Com.  v.  Rail- 
road n.  440 
Cotting  V.  Kansas  City  S.  Y. 

Co.  n.  57,  n.  222,  n.  259,  331 
Covington  &  L.  T.  R.  Co.  v. 

Sandford  n.  257,  n.  331 

Cowden  v.  Pacific  Coast  S.  S. 

Co.  n.  341 

Coy  V.  Indianapolis  Gas  Co.  n.  20 
Crescent  Coal  Co.  v.  L.  &  N. 

R.  R.  Co.  n.  101 

Crumley  v.  Watauga  W.  Co.  n.  19 
Cullen,    Matter    of    v.    New 

York  Tel.  Co.  150 

Cumberland  T.   &   T.   Co.   v. 

City  of  Evansville  466 

V.  Hobart  n.  152 

V.  Kelly  n.  402 

V.  Memphis  n.  274 

V.  Morgan's  L.  &  T.  R. 

R.  Co.  n.  338 

Curtis  V.  Murphy  n.  136 

Darnell  v.  State  n.  479 

Day  V.  Owen  n.  338 

DeBoard  v.  Camden  Int.  Ry. 

Co.  173 

Delaware,  L.  &  W.  R.  R.  v. 

Central  S.  Y.  &  T.  Co.  n.  72 

V.  United  States  n.  167 

Denton  v.  Great  N.  Ry.  Co.     n.  176 

Derby  v.  Lowry  141 

Des  Moines  W.  Co.  v.  City  of 

Des   Moines  329 

Detroit   Gas   Co.   v.   Moreton 

T.  &  S.  Co.  154 

DeWolf  V.  Ford  394 

Dietrich  v.  Pennsylvania  R. 

R.  Co.  n.  176 

Donovan  t\  Pennsylvania  Co.  125 
Dow  V.  Beidolman  n.  257 

Dunn  V.  Western  Un.  T.  Co.     441 

lOagle  ?\  Wbite  n.  103 

East    Kentucky    Ry.    Co.    v. 

Iloldbrook  139 

East  Ohio  Gas  Co.  v.  City  of 

Akron  461 

East  Tennessee  V.  &  G.  Ry. 

Co.  V.  Int.  Com.  Com.  n.  362 
Evans  v.  Fitchburg  R.  Co.    n.  101 


TABLE    OF    CASES. 


IX 


PAGE 

Express  Cases  115 

Farmers  L.  &  T.  Co.  v.  Ilen- 

iiiug  452 

Farwell  F.  W.  Assn.  v.  Min- 
neapolis,  St.  P.  &  S.   Ste. 

M.  Ky.  Co.  n.  433 

Fay  V.  Pacific  Imp.  Co.  n.  8 

Fish  V.  Chapman  87 

V.  Newton  n.  103 

Fitch  V.  Newberry  n.  138 

Florida    E.    C.    Ry.    Co.    v. 

Carter  n.  176 

Fluker  v.  Georgia  R.  R.  Co.  n.  128 
Ford  V.  East  St.  Louis  R.  R. 

Co.  143 

Forrester    Co.    v.    Southern 

Ry.  Co.  11.  415 

Fuhrman   v.    Buffalo    G.    E. 

Co.  n.  297.  301 

Galena  &  Ch.  Un.  R.  R.  Co. 

V.  Rae  n.  139,  409 

Gamble-Robinson    Com.    Co. 

V.  Chicago  &  N.  W.  Ry.  Co.  371 
Gas  Light  Co.  v.  Colliday  n.  156 
Geer  v.  Railroad  Co.  n.  178 

German  Alliance  Ins.  Co.  v. 

Lewis  57 

Germania  Ref.  Co.  v.  Alum 

Rock  G.  Co.  n.  460 

Gibson  v.  Culver  n.  103 

Gisbourne  v.  Hurst  n.  8 

Gist  V.  Telegraph  Co.  n.  152 

Godbout   V.    St.   Paul   Union 

Depot  n.  128 

Goodenow  v„  Travis  n.  137 

Gordon  v.  Winchester  n.  30 

Godwin  v.  Carolina  T.  &  T. 


Co. 


n.  152 


Gray  v.  Western  Un.  T.  Co.  n.  152 
Great  W.  Ry.  Co.  v.  Sutton  n.  341 
Greenfield    v.    Detroit   &    M. 

Ry.  Co.  n.  176 

Griffin  v.  Goldsboro  W.  Co.  n.  19 
Griswold  v.  Webb  n.  128 

Gulf  C.   &  S.  F.   Ry.   Co    v. 

Moody  n.  176 

Hannah  v.  People  160 

Harp  ??.  Choctaw,  O.  &  G.  R. 

R.  Co.  168 

Hatch  V.  Consumers  Co.  210 

Haugen   v.    Albina    L.    &  P. 

Co.  14 

Hedding  v.  Gallagher  n.  128 

Hervy  v.  Hart  396 

Hewlett   V.   Western   Un.  T. 

Co.  206 


PAGE 

Hibbard  v.  N.  Y.  &  Erie  R. 

R.  Co.  n.  195 

Hill  V.  Antigo  W.  Co.  313 

Home  T.  &  T.  Co.  v.  City  of 

Los  Angeles  260 

Honeyman    v.    Oregon    &    C. 

R.  R.  Co.  n.  101 

Hoover    v.    Pennsylvania    R. 

R.  Co.  n.  382 

Houck    V.    Southern    P.    Ry. 

Co.  n.  338 

Hudson  V.  Ry.  Co.  v.  Boston 

&  M.  R.  R.  n.  103 

Hurley  v.  Eddington  n.  8 

Huston  V.  Peters,  Hardin  »& 

Co.  n.  104 

Hyde  v.  Trent  &  Mersey  Nav. 

Co.  103 

Illinois    Cent.    R.    R.    Co.    v. 

Interstate   Com.    Com.  281 

V.  River  &  Rail  C.  &  C. 

Co.  410 

;;.  Smith  n.  147 

Industrial  Siding  Case  n.  440 

Intermouutain  Rate  Cases      n.  362 

International    Bridge   Co.    v. 

Canada  So.   Ry.  Co.  212 

Inter-Ocean    Publishing    Co. 

V.   Associated   Press  72 

Interstate  Com.  Com.  v.  Ala- 
bama M.  Ry.  Co.  357 

V.  Baltimore  &  O.  R..  R. 
Co.  347 

V.   Chicago,    R.    I.   &   P. 
Ry.  Co.  n.  237 

V.  Cincinnati,  N.  O.  &  T. 
P.    Ry.    Co.  231 

V.  Delaware,  L.  &  W.  R. 
R.  Co.  375 

V.  Humboldt  S.  S.  Co.     n.  237 
V.  Illinois  C.  R.  R.  Co.         364 

Jackson  v.  Anderson  n.  399 

V.  Rogers  3 

V.  Virginia  II.  S.  Co.  393 

Jarrett  v.  Great  N.  Ry.  Co.  n.  104 
.Tencks  v.  Coleman  n.  128,  n.  149 
Johnson    v.    Concord    R.    Ru 

Corp.  n.  176,  n.  178 

V.  Dominion  Exp.  Co.      n.  380 

V.  Midland  Ry.  n.  136 

V.  Peusacola  &  P.  R.  R. 

Co.  338 

Jones  V.  North  Ga.  El.  Co.      n.  20 

Kansas     Pae.     Ry.     Co.     v. 

Nichols,  Kennedy  &  Co.  96 

Kates  V.  Cab  Co.  n.  128 


TABLE    OF    CASES. 


PAGE 
Kiley    v.    Chicago    City    Ry. 

Co.  n.  198 

King  r.  Luellin  n.  136 

V.  Severn  &  Wye  Ry.  Co.  450 

Kisteu    V.    Hildebraud     n.   95,  135 

Knight  V.   Providence  &  W. 

R.  R.  Co.  n.  130 

Knoxville    v.    Knoxville    W. 

Co.  n.  257,  n.  301 

Knoxville  Tr.  Co.  v.  Wilker- 

son  n.  176,  n.  200 

Korn  L\  Railway  Co.  n.  146 

Kuter   V.  Michigan  C.  R.  R. 

Co.  n.  101 

Ladd  V.  Southern  C.  P.  &  M. 
Co.  66 

Laighton  v.  City  of  Car- 
thage n.  463 

Lake    Shore  &   M.   S.   R.   R. 

Co.  V.   Greenwood  176 

V.  Perkins  n.  101 

Lamond  v.  Richard  n.  137 

Lane  v.  Cotton  n.  8 

V.  Railroad  Co.  n.  178 

Lawrence  v.  Richards  402 

Leavell    v.    Western    Un.    T. 

Co.  400 

Lemon  v.  Pullman  Palace- 
Car  Co.  n.  9 

Little  Rock  &  M.   R.  Co.  v. 

St.  Louis  S.  W.  R.  Co.        n.  103 

Live  Stock  Com.  Co.  v.  Live 
Stock  Exch.  n.  74 

Llovd  V.   Washington   G.   L. 

Co.  n.  156 

Long  Branch  Com.  v.  Tintern 

M.  W.  Co.  273,  316 

Lough  V.  Outerbridge  n.  382 

Louisville  v.  Cumberland  T. 
&  T.  Co.  n.  257 

Louisville  &  N.  R.  R.  Co.  v. 
Behlmer  n.  362 

V.  Roland  n.  103 

V.  Interstate  Com.  Com.     234 
V.   Logan  n.  146 

V.  R.  R.  Com.  of  Ala.  297 

V.  Turner  179 

Louisville  W.  Co.  v.  Wieuier  n.  154 

Lowell  ;;.  Boston  ii.  30 

Lumbard  v.   Stearns  U) 

Lusby  V.  Kansas  City,  M.  & 

B.   R.  R.  Co.  472 

McCarter  v.  Vineland  L.  & 
P.  Co.  n.  471 

McConnell  v.  Southern  Ry. 
Co.  n.  415 

McGuinn  v.  Forbes  n.  338 


PAGE 

McHugh  V.  Schlosser  n.  137 

McMillan  v.  Michigan  S.  & 

N.  I.  R.  R.  Co.  n.  141 

McNees   v.   Missouri   P,   Ry. 
Co.  n.  341 

M'Neill   V.   Durham  &  C.  R. 
R.  Co.  384 

McRea  v.  Railroad  Co. 

n.  176,  n.  184 

McReynolds,  In  re  v.  Brook- 
lyn U.  R.  R.  Co.  n.  322 

Mackin    v.    Boston    &   A.    R. 

Co.  n.  103 

Macon    &    W.    R.    R.    Co.    v. 

Johnson  n.  176 

Madison  v.  Madison  G.  &  E. 
Co.  n.  220 

Madisouville   Tr.    Co.    v.    St. 

Bernard  M.  Co.  n.  11 

Mann    Boudoir    Car    Co.    v. 
Dupre  n.  397 

Markham  v.  Brown  u.  137 

Maroney    v.    Old    Colony    & 
Newport  R.  R.  Co.  185 

Marriott.  In  re  n.  128 

Martin,  The  D.  R.  n.  128 

Mayhew  v.  Kings  Co.  L.  Co. 

n.  308,  n.  318 

Maynard   v.    Syracuse,    B.   «& 
N.  Y.  R.  Co.  n.  101 

Memphis    News   Pub.    Co.   v. 
Southern    Ry.    Co.  n.  338 

Merchants    Dispatch    Co.    v. 

Cornforth  414 

Metropolitan  T.  Co.  v.  Hous- 
ton T.  &  C.  Ru  R.  Co.  «.  281 

Michigan  C.  R.  Co.  v.  Smith- 
son  n.  103 

Miller  v.  Wilkes  Barre  Gas 

Co.  n.  156 

Mills  V.  M.  K.  &  T.  Ry.  Co.  n.  195 

Minneapolis  &   St.   L.   R.   R. 
Co.    V.    Minnesota        n.  273,  427 

Minnesota    C.    &    P.    Co.    v. 
Pratt  20 

Minnesota  Rate  Cases 

».  248,  n.  257,  284,  n.  301, 

318,   n.  326 

Missouri,  K.  &  T.  Ry.  Co.  v. 

Harrison  n.  419 

r.  Herring  n.  17() 

V.  State  n.  430 

Missouri  Pac.  Ry.  Co.  v.  Ne- 
braska n.  11 
V.  Smith                              n.  253 

Missouri  Rate  Cases  /(.  257 

]\Iockin  V.  Portland  Gas  Co.  n.  156 

Moore    v.    Brooklyn   City    R. 
R.  Co.  n.  461 


TABLE    OF    CASES. 


XI 


PAGE 

Morey   v.    Metropolitan   Gas 
L.  Co.  n.  15G 

Morris   v.   Atlantic   Ave.    U- 
R.  Co.  n.  195 

Munn  ly.  Illinois 

31,  n.  78,  237,  n.  331,  n.  446 
V.  People  n.  40 

Murphy     Hardware    Co.     v. 

Southern   Ry.   Co.  139 

Nairin  v.  Kentucky  Heating 
Co.  n.  20,  134 

Nash  V.  Page  n.  67,  n.  76 

Nashville,  C.  &  St.  L.  Ry.  Co. 

V.  State  w.  427 

Nelson  v.  Boldt  n.  136 

Nevin    v.    Pullman    Palace- 
Car  Co.  n.  9 

New    Orleans    G.    L.    Co.    v. 

Paulding  n.  30 

News  Puhlishing  Co.  v.  Asso- 
ciated Press  n.  76 

New  York,  N.  H.  &  H.  R.  R. 

Co.  V.  Bork  n.  128 

V.  Interstate  Com.  Com.  n.  1(J7 
V.  Scovill  n.  128 

New  York  P.  &  N.  R.  R.  Co. 
V.  Cromwell  n.  41.5 

Nichols  V.  Oregon  S.  L.  Co.  n.  338 

Nicholson  v.  Great  W.  R.  R. 

Co.  n.  3.55 

Norfolk  &  W.  R.  Co.  v.  Con- 
ley  n.  259 
17.  Old  Dom.  B.  Co.  n.  128 

Northern  Pacific  R.y.   Co.   v. 

North  Dakota  253 

V.  R.  R.  Com.  of  Wash.       436 

Northern   Ry.   Co.   v.   Wash- 
ington 11.  456 

Nota  2 

Nye  V.  Western  Un.  T.  Co.    n.  152 

Ocean  S.  S.  Co.  of  Savannah 

V.    Savannah   L.    W.   &   S. 

Co.  397 

Oconto   City    W.    S.   Co.,   Re 

Application  of  n.  316 

Ohio  &  M.  Ry.  Co.  v.  People  n.  461 
Olanta  Coal  M.  Co.  r.  Beech 

Creek  R.  R.  Co.  n.  141,  433 

Old  Colony  R.  Co.  v.  Tripp  n.  128 
Olmstead    v.    Proprietors    of 

Morris    Aqueduct  13 

Oregon  v.  Portland  Gen.  El. 

Co.  n.  471 

Oregon  S.  L.  &  V.  N.  Ry.  Co. 

V.  Northern  P.  R.  Co.  n.  103 

Owens  V.  Macon  &  B.  R.  Co.  n.  147 
Owensburg     G.     L.     Co.     v. 

Hildebrand  n.  20,  n.  76 


PAGE 

Paige    V.     Schenectady     Ry. 

Co.  n.  455 

Pannell    v.    Louisville    Tob. 

W.  Co.  n.  270 

Patterson  v.  Wollman  n.  30 

Pearsall  v.  Western  Un.  Tel. 

Co.  n.  190 

Pearson  v.  Duane  147 

Peik  V.  Chicago  &  N.  W.  Ry. 

Co.  n.  238 

Pennsylvania    R.    R.    Co.    v. 
Philadelphia  County 

n.  259,  n.  292 

People  i\  Babcock  n.  94 

V.  Budd  40 

V.    Chicago   &   A.    R.    R. 

Co.  n.  423 

V.  Chicago  &  N.  W.  Ry. 
Co.  431 

V.  Delaware  &  H.  C.  Co.  n.  426 
V.  Hudson  Riv.  T.  Co.  n.  134 
V.  Los  Angeles  I.  G.  Co.  n.  135 
V.  Manhattan  G.  L.  Co.  n.  156 
■V.  Murphy  n.  96 

V.  O'Brien  n.  463 

V.  Railway  n.  456 

V.  Rome,  W.  &  O.  R..  R. 
Co.  458 

Perth  Gen.   Station  Com.  v. 

Ross  n.  128 

Phelps  V.  Illinois  Cent.  R.  R. 

Co.  n.  141 

Pickford  v.  Grand  Junction 

Ry.   Co.  n.  139,  n.  176 

Pioneer  T.  &  T.  Co.  v.  Wes- 

tenhaver  304 

Pipe  Line  Cases  62 

Pittsburgh  C.  C.  &  St.  L.  Ry. 

Co.  V.  Chicago  n.  103 

V.  Hollowell  n.  141 

V.  Vandyne  h.  146 

Plummer  v.  Chesapeake  &  O. 

Ry.  Co.  n.  471 

Portland  Nat.  Gas  &  Oil  Co. 

V.  State  n.  20 

Prendergast  v.  Compton         n.  149 
Price  V.  Crocker  n.  30 

V.  Riverside  L.  &  I.  Co.     n.  20 
V.  St.  L.,  I.  M.  &  S.  R.  R. 
Co.  146 

Public  Serv.  Coii).  v.  Ameri- 
can L.  Co.  n.  20 
Puget  Sound  El.  Ry.  v.  R.  R. 

Com.  of  Washington  283 

Pullman    Palace-Car    Co.    v. 

Booth  n.  9 

V.   Cain  «.  338 

V.  Krauss  n.  147 

V.  Lawrence  9,  106 


Xll 


TABLE    OF    CASES. 


V.  Taylor 
Qneeus  Borough  G.  &  El  Co 
III  re  Rates  of 


PAGE 

n.  397 
322 


Railroad  Commission  Case    n.  331 
Railroad  Discrimination 

Rateliff   V.    Wichita    Un     S      ^^^ 

^-  ^«-  n    57 

Reagan  v.  Farmers  L    &  T 

<^0-  238,  n.  245,  n.  257. 

it        997       jj        OO-I 

Reasor  v.  Paducah  &  m    f    ' 

^^^-  '     '     145 

Regina  v.  Rymer  „    I37 

V.  Sprague  n.  137    n    sqs 

Renaud  ^.  N.  Y.,  N.  H   &  ik 

R.  R.  Co.  n    1-r 

Rex  V.  ivens  4-  j'i: 

Rich  V.  Kneeland  '      j 

Robinson  v.  Chicago  &  A.  R. 

R.  Co.  ..p 

Rockingham  Co.  L.  &  P   Co 

V.  Hobbs  •       •  „_  ig 


St.    Louis    Drayage    Co.    v 

Louisville,  etc.,  R.  R.  Co.  n.  V. 
St    Louis  &  S.  F.  Ry.  Co.  v. 

St    Louis  &  S.  W.  Ry.  Co.  v 
Campbell  „    4. 

Sammons  v.   Kearney  „    ^ 

San  Antonia   St.   Ry.  Co.  v.     '  ' 
State  . 

San    Diego   L.    &    T.    Co    7; 

•^T  M  «       ,  ^      «•  257,  n.  31 
V.  National  City 

«?on    T^-  ''•  ^^Jr   "•  273,  293,  n.  33 
San    Diego    W.    Co.    t;.    San 
Diego  ^ 

Sargent  v.  Boston  &  L   R   R    '  " 
Corp.  •      ■ 

Satterlee  v.  Groat  44; 

Savannah  &  O.  Canal  Co.  v 
Shuman  .,.- 

Schroeder  t;.  Iludson  Riv.  R.  ' 

Scofleld"u  Raihvay  Co.  n.  347  .S^ 
Sears  i;.  Railroad  Co.  ,  '     jg 

Searles  v.  Mann  Boudoir  Car  ' 

Selectmen  of  Amesbury  i;  ""  ^ 
„,,^'"^«"«  E-  St.  Ry.  Co  n.  403 
Shea  ?;.  Chicago,  R.  i    &  p 

^y-  Co.  ■    ,._ 

Shepard  v.  Milwaukee  G    L  * 

-N.Pae.R,Co.     ^^  ^nS^S^ 


Shiras  V.  Ewing  ^^^ 

Si  kman  t;.  Yonkers  W.  Com.  n.  355 
Simpson     V.     Attorney-Gen- 

Sinking  Fund  Cases  n    so 

Smyth  t;.  Ames 

243.  n.  257.  '^97    «    ^qi 
Southern  P.  Co.  ^.  Boa^d  of       ' 
R-  R.  Com.  of  Calif. 


V.  Campbell 


«.  257, 


278 
263 


250 


!41 


Spofford  V.  Boston  &  M.  R. 

Spring  Valley  W.  Co.  ^;.  San" 

Prancisco  ,,    01  ^ 

Spring  Valley  W.  W.  Co.  v 

fechottler  ;,    oqi 

Stanislaus  County  u  San  J 

&  Iv.  R.  C.  &  L  Co.  ,j    057 

Starr  v.  Crowley  '  Ti^o 

State  ..Associated  Press  "'7? 
^-  ^<^"  Telephone  Co.  10  131 
V.  Lridgeton  &  M.  T.  Co  ti  454 
V.  Butte  W.  Co.  „    .5o 

f.  Citizens  T.  Co.  n    152 

t^.  Consumers   Gas   Co. 

-^Delaware,  L.  &  w^'""'  '^' 

•   ^^-  344 

V.   Dodge  City,  M.  &  t. 
^y-  Co.  „     ,p^ 

^.  Goss  "•  f!^l 

^.Hartford  &  N.  H.  R. 

^elena  P.  &  lVo'^'  ^T  ^ 
V.  Hillyard  W.  Co.  n   o'n 

^^•J'.  Kansas  C.  S.  &  G.  Ry.  ' 

V.  Kinlock  T.  Co.  n    15? 

V.  Missouri  P.  Ry.  Co     n    4^5 
V.  Nebraska    Tel     Co 

„  w.  10,  «.  70,  n    152 

^J^.  Portland  Nat.  G.  &  6 

^-  Rail^vay  „    ^I^ 

^.  R^^al  Est.  Bk.  •  4?o 

V.  Reed  '•  j.^o 

-y.  Republican   V.  R.   R.        ~ 

V.  Seattle  L.  Co.  „    oj? 

V.  Sedalia  G.   L.  Co.       n.  3.5.5 
^.  Sioux  City  &  P.  R.  R. 

«    4^:4 
V.  Southern  Minn.  R.  R.  ' 

t^.   Steele  „.  136,  «.  137 

V.  Thompson  „.  395 


TABLE   OF    CASES. 


Xlll 


PAGE 

V.  Union  Depot  Co.  n.  128 

V.  Union  r.  R.  R.  Co.      n.  387 
V.  AS^bite  Oak  Ry.  Co.      n.  436 
State  Journal  P.  Co.  v.  Madi- 
son   G.    &    El.    Co.  n.  306 
Steenerson   v.   Great   N.   Ry. 

Co.  n.  297 

Stone   V.    Farmers    L.    &   T. 

Co.  ».  238,  «.  257 

Sue,  The  335 

Summitt  v.  State  ?^.  128 

Sutcliffe  V.  Great  W.  Ry.  Co.  n.  101 

Talcott  V.  Township  of  Pine 

Grove  n.  454 

Texas  &  P.  Ry.  Co.  v.  R.  R. 

Com.  of  La.  n.  297 

Thomas    v.    Missouri    P.  R.. 

Co.  n.  103 

Thompson  v.  Lacy  94 
V.  Schenectady  Ry.  Co.  n.  455 

Thurston  v.  Union  P.  R.  R. 

Co.  144 

Tidewater  Co.  v.  Coster  n.  14 

Tift  V.  Southern  Ry.  Co.  215 

Townsend    v.    New    York  C. 

&  H.  R.  R.  R.  Co.  195 

Tunnell  v.  Pettijohn  n.  94 

Turner  v.  North  Car.  R.  R. 

Co.  n.  145 

Turnpike  Co.  v.  Illinois  n.  463 

Union  Pae.  R.  R.  Co.  v.  Hall  n.  455 

United    States   v.    Baltimore 

&  O.  R.  R.  Co.  387 

V.  Chicago  I.  &  L.  R.  Co.  n.  387 

V.  Lehigh  V.  R.  R.  Co.         164 

United    States    Tel.    Co.    v. 

Gildersleeve  n.  190 

Van  Camp  v.  Michigan  Cent. 

R.  R.  Co.  n.  178 

Van   Santvoord   v.   St.   John     106 


PAGE 

Vicksburg   v.    Vicksburg    W. 

W.  Co.  n.  260 

Village  of  Saratoga  Springs 

V.  Saratoga  G.,  E.  L.  &  P. 

Co.  227 

Vincent  v.  Chicago  &  W.  R. 

R.  Co.  n.  433 

Wabash,     etc.,     Ry.     Co.     v. 

Illinois  n.  76 

Watauga  W.  Co.  v.  Wolfe  n.  201 
Webbe  v.  Western  Un.  T.  Co.  186 
West  V.  London  &  N.  W.  Ry. 

Co.  n.  433 

Western  Un.  T.  Co.  v.  Cain  n.  206 
V.  Cashman  n.  152 

V.  McMillan  n.  176 

V.  Neel  n.  176 

V.  Simmons  129 

V.  Trotter  204 

Weymouth   v.    Penobscot   L. 

D.  Co.  «.  30 

Wheeler,  Matter  of  n.  466 

Wheeler    v.    Noi'thern    C.    I. 

Co.  n.  76 

Whitehouse  v.  Staten  Island 

W.  Co.  398 

Wiemer  v.  Louisville  W.  Co.  152 
Wiggens    Ferry   Co.   v.    East 

St.  L.  Ry.  Co.  n.  101 

Wight  V.   United  States  355 

Wilcox  V.  Consolidated  Gas 

Co.  «.  257,  328 

Williams  v.  Mutual  Gas  Co. 

n.  20,  n.  76 
Winters    M.    P.    Co.    v.    Chi- 
cago, M.  &  St.  P.  Ry.  Co.        440 
Woods    V.    Vandal  i  a    R.    R. 

Co.  «.  288 

Yancy  v.  Batesville  T.  Co.  n.  375 
Yazoo  &  M.  V.  R.  R.  Co.  v. 

Blum  n.  410 

York    &    N.    M.    Ry.    Co.    v. 

Queen  447,  n.  456 


CASES  ON  THE  LAW  OF 
PUBLIC  SERVICE. 


chapter  l 
3:he  bases  of  the  duties  of  public 

SERVICE. 

Section  1. 

The  Common  Callings. 

ANONYMOUS. 
T.  B.  19  H.  VI  49,  pi.  5.     1441.^ 

Newton,  C.  J.  My  horse  is  ill,  and  I  come  to  a  horse-doctor  for 
advice,  and  he  tells  me  that  one  of  his  horses  had  a  similar  trouble, 
that  he  applied  a  certain  medicine,  and  that  he  will  do  the  same  for 
my  horse,  and  does  so,  and  the  horse  dies;  shall  the  plaintiff  have 
an  action?     I  say.  No. 

Paston,  J.  You  have  not  shown  that  he  is  a  common  surgeon  to 
cure  such  horses,  and  so,  although  he  killed  your  horse  by  his  medi- 
cines, you  shall  have  no  action  against  him  without  an  assumpsit. 

Newton,  C.  J.  If  I  have  a  sore  on  my  hand,  and  he  applies  a 
medicine  to  my  heel,  by  which  negligence  my  hand  is  maimed,  still  I 
shall  not  have  an  action  unless  he  undertook  to  cure  me.^ 


RICH  V.  KNEELAND. 

Croke  Jac.  330.     1613. 

Action  on  the  case.  Whereas  the  defendant  was  a  common 
bargeman,  and  used  to  carry  for  hire  from  London  to  Milton,  and 

1  The  case  as  here  given  is  taken  from  Professor  J.  B.  Ames'  article  oo 
The  History  of  Assumpsit,  in  2  Harvard  Law  Review,  1,  3. —  Ed. 

2  "  If  .  .  .  one  saw  fit  to  authorize  another  to  come  into  contact  with  his 
person  or  property,  and  damage  ensued,  there  was,  without  more,  no  tort. 
The  person  injured  took  the  risk  of  all  injurious  consequences,  unless  the 


2  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

other  places  in  Kent;  that  he  delivered  to  him  a  portmanteau  and 
thirty  pounds  therein  to  carry,  and  gave  to  him  twopence  for  the 
carriage ;  and  that  the  defendant  tarn  negligenter  custodivit,  that  it 
was  taken  from  him  by  persons  unknown,  and  so  he  lost  it. 

The  defendant  pleads,  confessing  the  receipt,  that  he  was  a 
common  bargeman;  but  that  he,  fearing  to  carry  it,  delivered  it 
to  J.  D.  to  carry,  and  that  he  gave  notice  thereof  to  the  plaintiff, 
and  he  agreed  thereto,  and  discharged  him  of  the  carriage. 

The  plaintiff  traverses  that  he  did  not  discharge  him. 

It  was  thereupon  demurred:  and  adjudged  for  the  plaintiff;  for 
the  delivery  by  his  assent  is  not  material:  but  the  only  matter 
traversable  is  the  discharge,  which  is  issuable;  and  found  for  the 
plaintiff. 

A  writ  of  error  being  brought,  it  was  assigned.  First,  Because 
this  action  lies  not  against  a  common  bargeman  without  special 
promise.  But  all  the  justices  and  barons  held  that  it  well  lies 
as  against  a  common  carrier  upon  the  land.  Secondly,  They  held 
that  the  traverse  was  good.     Wherefore  the  judgment  was  affirmed.^ 


NOTA. 

Keilvvey,  50.     1450. 

Note,  that  it  was  agreed  by  all  the  court,  that  where  a  smith 
declines  to  shoe  my  horse,  or  an  innkeeper  declines  to  give  me 
entertainment  at  his  inn,  I  shall  have  an  action  on  the  case,  not- 
withstanding no  act  is  done;  for  it  does  not  sound  in  covenant. 
But  where  a  carpenter  makes  a  bargain  to  build  me  a  house  and 
does  notliing,  no  action  on  the  case,  because  that  does  sound  in 
covenant.  But  if  he  builds  the  house  badly,  the  action  on  the 
case  is  good.  Note,  that  in  this  case  a  man  shall  have  no  action 
against  the  innkeeper,  but  shall  make  complaint  to  the  ruler,  by 
5  Ed.  4.  fol.  2.  Contra,  14  H.  7.  fol.  22.^ 

other  expressly  assumed  the  risk  himself,  or  unless  the  peculiar  nature  of 
one's  calling  .  .  .  imposed  a  customary  duty  to  act  with  reasonable  skill." 
J.  B.  Ames,  The  History  of  Assumpsit,  2  llarvard  Law  Review,  1,  3. 

1  "  An  express  a.ssumpsit  was  originally  an  essential  part  of  the  plain- 
tiff's case  in  another  class  of  actions,  namely,  actions  on  the  case  against 
bailees  for  ncgligfiicc  in  the  custody  of  the  things  entrusted  to  them.  .  .  . 
This  act  of  Inking  possession  of  the  goods,  his  assumpsit  to  keep  them  safely, 
and  their  subsecpient  loss  by  his  default,  together  made  up  the  tort.  .  .  . 
J'aih'cs  whose  calling  was  of  a  quasi-public  nature  were  chargeable  by  the 
custom  of  the  realm,  without  any  exi)ress  Tindertaking."  J.  B.  Ames,  The 
History  of  Assumpsit,  2  Harvard  Law  IJeview,  1,  4  to  0. 

2  .\ftor  some  vacillation  it  was  establ'shtnl  that  mere  breach  of  a  special 
assimipsit  was  not  actionable,  .T.  B.  Ames,  The  History  of  Assumpsit,  2 
Harvard  Law  Keview.  1,   10  and  11,  but  it  appears  supra  that  the  breach 


SEC.   I.]  THE   COMMON    CALLINGS.  3 

JACKSON  V.  ROGERS. 

2  Shower,  327.     1683. 

Action  on  the  case,  for  that  whereas  the  defendant  is  a  common 
carrier  from  London  to  Lymmington  et  ahinde  retrorsum,  and 
setting  it  forth  as  the  custom  of  England,  that  he  is  bound  to 
carry  goods,  and  that  the  plaintiff  brought  him  such  a  pack,  he 
refused  to  carry  them,  though  offered  his  hire. 

And  held  by  Jefferies,  Chief  Judge,  that  the  action  is  main- 
tainable, as  well  as  it  is  against  an  innkeeper  for  refusing  guests, 
or  a  smith  on  the  road  who  refuses  to  shoe  my  horse,  being  tendered 
satisfaction  for  the  same. 

Note,  that  it  was  alleged  and  proved  that  he  had  convenience  to 
carry  the  same;  and  the  plaintiff  had  a  verdict.^ 


3     BLACKSTONE'S  COMMENTARIES  165. 

"  There  is  also  in  law  always  an  implied  contract  with  a  common 
innkeeper,  to  secure  his  guest's  goods  in  his  inn;  with  a  common 
carrier  or  bargemaster,  to  be  answerable  for  the  goods  he  carries; 
with  a  common  farrier,  that  he  shoes  a  horse  well,  without  laming 
him;  with  a  common  taylor,  or  other  workman,  that  he  performs 
his  business  in  a  workmanlike  manner;  in  which  if  they  fail,  an 
action  on  the  case  lies  to  recover  damages  for  such  breach  of  their 
general  undertaking.  But  if  I  employ  a  person  to  transact  any  of 
these  concerns,  whose  common  profession  and  business  it  is  not,  the 
law  implies  no  such  general  undertaking;  but,  in  order  to  charge 
him  with  damages,  a  special  agreement  is  required.  Also,  if  an 
innkeeper,  or  other  victualler,  hangs  out  a  sign  and  offers  his  house 
for  travellers,  it  is  an  implied  engagement  to  entertain  all  persons 
who  travel  that  way;  and  upon  this  universal  assumpsit  an  action 
on  the  case  will  lie  against  him  for  damages,  if  he  without  good  rea- 
son refuses  to  admit  a  traveller." 

of  an  assumpsit  formed  an  essential  element  in  several  rights  of  action,  and 
it  further  appears  that  very  little  in  the  nature  of  active  misconduct  was 
necessary  in  addition  to  the  breach  of  an  assumpsit  to  constitute  a  cause  of 
action.  In  1488  Brian,  C.  J.,  said :  "  If  there  be  an  accord  between  you 
and  me  that  you  shall  make  me  an  estate  of  certain  land,  and  you  enfeoff 
another,  shall  I  not  have  an  action  on  my  case?  Quasi  diceret  sic.  Et 
curia  cnm  illo.  For  when  he  undertook  to  make  the  feoffment,  and  conveyetl 
to  another,  this  is  a  great  misfeasance."     Y.  B.  3  H.  VII,  14,  pi.  20. 

1  "  An  action  upon  the  case  lyeth  against  an  innkeeper  who  denies  lodging 
to  a  travailer  for  his  money,  if  he  hath  spare  lodging;  because  he  hath  sub- 
jected himself  to  keep  a  common  inn."     Anonymous,  Godbolt  335,  pi.  440. 


BASES    OF   PUBLIC    SERVICE   DUTIES.  [CHAP.   I. 


EEX  V.  IVEXS. 

7  C.  &  P.  213.     1835.^ 

Indictment  against  the  defendant,  as  an  innkeeper,  for  not  re- 
ceiving Mr.  Samuel  Probyn  Williams  as  a  guest  at  his  inn,  and  also 
for  refusing  to  take  his  horse.  The  first  count  of  the  indictment 
averred  that  the  prosecutor  had  offered  to  pay  a  reasonable  sum  for 
his  lodgings ;  and  the  first  and  second  counts  both  stated  that  there 
was  room  in  the  inn.  The  third  count  omitted  these  allegations, 
and  also  omitted  all  mention  of  the  horse.  The  fourth  count  was 
similar  to  the  third,  but  in  a  more  general  form.  Plea  —  Not 
guilty. 

It  was  opened  by  Whittnore,  for  the  prosecution,  that  the  de- 
fendant kept  the  Bell  Inn,  at  Chepstow,  and  that  the  prosecutor 
Mr.  Williams  had  gone  there  on  horseback,  on  the  night  of  Sunday 
the  14th  of  April ;  and  that  the  defendant  and  his  wife  both  refused 
him  admittance  into  the  inn. 

Godson,  for  the  defendant.  Does  your  lordship  think  that  an 
indictment  lies  against  an  innkeeper  for  refusing  to  receive  a  guest  ? 
I  know  that  an  action  may  be  brought  against  him  if  he  does  so; 
and  such  an  action  was  brought  against  an  innkeeper  at  Lancaster 
a  few  years  ago.  This  is  only,  at  most,  a  private  injury  to  Mr,  Wil- 
liams, and  not  an  offence  against  the  public. 

Coleridge,  J.  There  can  be  no  doubt  that  this  indictment  is 
sustainable  in  point  of  law.  Mr.  Serjeant  Hawkins  distinctly 
lays  it  down  that  an  indictment  lies  for  this  offence. 

Godson.  My  friend  Mr.  Whitmore,  has  said  nothing  about  any 
offer  of  the  price  of  the  entertainment,  which  Mr.  Serjt.  Hawkins 
states  to  be  necessary  to  sustain  an  indictment. 

Coleridge,  J.  There  may  be  facts  in  this  case  which  may  make 
the  tender  of  reward  unnecessary. 

Mr.  Samuel  Probyn  Williams  was  called.  He  said,  "  I  am  the 
clerk  of  Mr.  Charles  Ilolden  Walker,  the  solicitor  of  Newport. 
On  Sunday  night  the  14th  of  April,  at  a  few  minutes  before  12 
o'clock,  I  applied  for  admission  at  the  Bell  Inn,  which  is  kept  by 
the  defendant.  I  had  applied  at  the  George,  but  that  was  shut 
up.  At  the  Bell  there  was  a  light  up  stairs,  in  the  room  over  the 
parlour.  I  asked  to  be  admitted,  and  the  defendant's  wife  said 
the  house  and  stables  were  both  full.  I  assumed  that  the  state- 
ment was  correct,  and  went  away  to  the  Beaufort  Arms,  and  I  rode 

1  The  form  of  the  indictment,  which  is  given  in  a  footnote  in  the  report, 
is  here  omitted. —  Ed. 


SEC.   I.]  THE  COMMON    CALLINGS.  5 

also  to  two  or  three  inns.  The  Beaufort  Arms  was  shut  up,  and 
some  of  the  other  inns  had  no  stables.  I  returned  to  the  Bell, 
and  I  told  the  defendant's  wife  that  I  knew  the  house  was  not  full, 
and  that  I  was  entitled  to  shelter  for  the  night,  and  I  insisted  on 
it.  I  could  not  see  if  she  was  dressed,  but  I  believe  she  and  her 
husband  were  in  bed.  She  asked  my  name,  and  I  said  that  that 
could  be  no  difference  to  her.  She  said  if  I  would  tell  my  name, 
she  would  ring  a  bell  for  one  of  the  servants.  I  told  her  my  name 
was  Williams.  She  asked  where  I  lived,  and  I  said  it  was  no  dif- 
ference to  her.  I  afterwards  told  her  I  came  from  Newport.  She 
shut  down  the  window,  and  said  she  did  not  know  me,  and  should 
not  open  the  door.  I  knocked  my  stick  against  the  window  shut- 
ters, and  the  defendant  looked  out  at  the  up-stairs  window.  I  told 
him  if  the  house  was  full,  I  could  take  a  chair,  and  he  might  put 
my  horse  in  a  shed  which  I  knew  they  had;  and  I  also  knew  that 
they  had  twelve  stalls  of  stabling.  I  again  urged  my  right  to 
shelter,  and  he  said  he  would  not  come  down  for  any  one.''  In  his 
cross-examination  he  said,  "  It  was  near  one  o'clock  when  I  went  to 
the  defendant's  house  the  second  time.  Two  writs  were  to  be  ex- 
ecuted at  Chepstow  on  the  Monday,  one  a  writ  of  trial,  and  another 
a  writ  of  inquiry,  and  I  was  to  be  there  on  Sunday  evening.  I 
went  by  way  of  Eedwick,  and  the  road  was  bad,  and  that  it  was 
that  made  me  so  late.  I  had  not  been  drinking.  I  at  first  objected 
to  give  my  name ;  and  when  I  did  give  it,  and  my  address,  I  might 
have  added,  '  and  now  you  are  as  wise  as  you  were  before ; '  but  I 
did  not  add  the  words,  '  and  be  damned  to  you.'  I  did  not  offer 
any  payment;  but  they  must  know  that  a  person  who  had  a  horse 
could  pay.  I  was  not  angry.  I  got  shelter  two  miles  off,  and  I  was 
near  two  hours  in  Chepstow."  In  answer  to  a  question  put  by  the 
learned  Judge,  he  said,  "  There  was  no  objection  made  that  I  did 
not  tender  any  money." 

Godson,  for  the  defendant.  It  appears  to  me  to  be  rather  too 
much  to  say  that  an  innkeeper  is  bound  to  keep  his  house  open  till 
12  o'clock  at  night  to  allow  attorneys'  clerks  to  travel  about  on  Sun- 
days. I  should  submit  that  the  law  never  can  require  an  innkeeper 
to  keep  open  his  house  till  midnight,  more  especially  on  a  Sunday. 
It  is  admitted  that  the  prosecutor  did  not  tender  any  money  or  make 
any  offer  of  payment.  And  further  it  will  be  proved,  that  the 
prosecutor  conducted  himself  so  as  to  be  unfit  for  admission  into 
any  respectable  house.  I  submit,  that  even  in  the  day-time  an 
innkeeper  is  not  bound  to  receive  a  guest  who  is  drunk  or  insolent, 
or  who  swears  at  eitlier  him  or  his  wife.  And  if  in  this  case  it  is 
shown  that  Mr.  AVilliams  did  so,  that  will  be  an  answer  to  the 
case.     In  addition  to  all  these  facts,  it  appears  that  the  prosecutor 


6  BASES    OF   PUBLIC    SEEVICE   DUTIES.  [CHAP,    I. 

refused  to  tell  his  name.  This  was  a  further  reason  why  the  de- 
fendant should  not  admit  him  into  his  house;  for  if  inn-keepers 
were  compellable  to  admit  all  sorts  of  suspicious  characters  into 
their  houses  at  unseasonable  hours  of  the  night,  there  would  be  a 
great  probability  that  they  would  find,  when  they  got  up  in  the 
morning,  that  their  houses  had  been  robbed. 

For  the  defendant,  Thomas  Price  was  called.  He  said,  "  I  re- 
side at  Chepstow,  opposite  to  the  Bell.  In  April  last,  I  was  dis- 
turbed in  the  night;  I  was  asleep,  and  I  heard  a  loud  noise  of  tap- 
ping at  a  door.  I  thought  it  at  my  house,  and  went  to  my  win- 
dow. I  heard  Mrs.  Ivens  ask  a  person  his  name.  The  answer 
was,  '  What  is  that  to  you  about  my  name.'  Mrs.  Ivens  said,  '  At 
such  a  late  hour  I  want  to  know  your  name,  and  where  you  come 
from.'  The  person  replied,  '  If  you  must  know  my  name,  it  is 
Williams,  and  I  come  from  Newport;  and  now  you  are  as  wise  as 
you  were  before,  and  be  damned  to  you.'  Mrs.  Ivens  then  shut 
the  window.  I  thought  the  person  was  either  drunk  or  mad."  In 
his  cross-examination  this  witness  said,  "  I  believe  Mrs.  Ivens  said 
the  person  was  no  gentleman.  It  quite  turned  my  spirits  to  hear 
such  a  bad  expression  as  he  used." 

Coleridge,  J.  (in  summing  up).  The  facts  in  this  case  do  not 
appear  to  be  much  in  dispute;  and  though  I  do  not  recollect  to 
have  ever  heard  of  such  an  indictment  having  been  tried  before, 
the  law  applicable  to  this  case  is  this :  —  that  an  indictment  lies 
against  an  innkeeper,  who  refuses  to  receive  a  guest,  he  having  at 
the  time  room  in  his  house;  and  either  the  price  of  the  guest's 
entertainment  being  tendered  to  him,  or  such  circumstances  occur- 
ring as  will  dispense  with  that  tender.  This  law  is  founded  in 
good  sense.  The  innkeeper  is  not  to  select  his  guests.  He  has  no 
right  to  say  to  one,  you  shall  come  into  my  inn,  and  to  another  you 
shall  not,  as  every  one  coming  and  conducting  himself  in  a  proper 
manner  has  a  right  to  be  received ;  and  for  this  purpose  innkeepers 
are  a  sort  of  public  servants,^  they  having  in  return  a  kind  of  privi- 
lege of  entertaining  travellers,  and  supplying  them  with  what  they 
want.  It  is  said  in  the  present  case,  that  Mr.  Williams,  the  prose- 
cutor, conducted  himself  improperly,  and  therefore  ought  not  to 
have  been  admitted  into  the  house  of  the  defendant.  If  a  person 
came  to  an  inn  drunk,  or  behaved  in  an  indecent  or  improper  man- 
ner, I  am  of  opinion  that  the  innkeeper  is  not  bound  to  receive 

2  In  Ansell  v.  Waterhouse  (1817),  2  Chit.  1,  TTolroyd.  J.,  said:  "This 
is  an  action  against  a  person  fa  common  carrier],  who.  by  ancient  law, 
held  as  it  were  a  public  office,  and  was  bound  to  the  public." 

In  .Teremy  on  Carriers,  p.  r^U,  it  is  said  of  a  common  carrier  that  he  is 
"  to  be  considered  in  the  light  of  a  public  servant,  and  as  such  liable  to  an 
action  for  refusing  to  take  charge  of  the  goods." 


SEC.    I.]  THE   COMMON    CALLINGS.  " 

him.     You  will  consider  whether  Mr.  Williams  did  so  behave  here. 
It  is  next  said  that  he  came  to  the  inn  at  a  late  hour  of  the  night, 
when  probably  the  family  were  gone  to  bed.     Have  we  not  all 
knocked  at  inn  doors  at  late  hours  of  the  night,  and  after  the  fam- 
ily have  retired  to  rest,  not  for  the  purpose  of  annoyance,  but  to  get 
the  people  up?     In  this  case  it  further  appears,  that  the  wife  of 
the  defendant  has  a  conversation  with  the  prosecutor,  in  which  she 
insists  on  knowing  his  name  and  abode.     I  think  that  an  innkeeper 
has  no  right  to  insist  on  knowing  those  particulars ;  and  certainly 
you  and  I  would  think  an  innkeeper  very  impertinent,  who  asked 
either  the  one  or  the  other  of  any  of  us.     However,  the  prosecutor 
gives  his  name  and  residence;  and  supposing  that  he  did  add  the 
words  "  and  be  damned  to  you,"  is  that  a  sufficient  reason  for  keep- 
ing a  man  out  of  an  inn  who  has  travelled  till  midnight  ?     I  think 
that  the  prosecutor  was  not  guilty  of  such  misconduct  as  would 
entitle  the  defendant  to  shut  him  out  of  his  house.     It  has  been 
strongly  objected  against  the  prosecutor  by  Mr.  Godson,  that  he  had 
been  travelling  on  a  Sunday.     To  make  that  argument  of  any 
avail,  it  must  be  contended  that  travelling  on  a  Sunday  is  illegal. 
It  is  not  so,  although  it  is  what  ought  to  be  avoided  whenever  it  can 
be.     Indeed  there  is  one  thing  which  shows  that  travelling  on  a 
Sunday  is  not  illegal,  which  is,  that  in  many  places  you  pay  addi- 
tional toll  at  the  turnpikes  if  you  pass  through  them  on  a  Sunday, 
by  which  the  legislature  plainly  contemplates  travelling  on  a  Sun- 
day as  a  thing  not  illegal.     I  do  not  encourage  travelling  on  Sun- 
days, but  still  it  is  not  illegal.     With  respect  to  the  non-tender  of 
money  by  the  prosecutor,  it  is  now  a  custom  so  universal  with  inn- 
keepers to  trust  that  a  person  will  pay  before  he  leaves  an  inn,  that 
it  cannot  be  necessary  for  a  guest  to  tender  money  before  he  goes 
into  an  inn;  indeed,  in  the  present  case,  no  objection  was  made 
that  Mr.  Williams  did  not  make  a  tender;  and  they  did  not  even 
insinuate  that  they  had  any  suspicion  that  he  could  not  pay  for 
whatever  entertainment  might  be  furnished  to  him.     I  think,  there- 
fore, that  that  cannot  be  set  up  as  a  defence.     It  however  remains 
for  me  next  to  consider  the  case  with  respect  to  the  hour  of  the 
night  at  which  Mr.  Williams  applied  for  admission ;  and  the  opin- 
ion which  I  have  formed  is,  that  the  lateness  of  the  hour  is  no  ex- 
cuse to  the  defendant  for  refusing  to  receive  the  prosecutor  into 
his  inn.     Why  are  inns  established?     For  the  reception  of  travel- 
lers, who  are  often  very  far  distant  from  their  own  homes.     Now,  at 
what  time  is  it  most  essential  that  travellers  should  not  be  denied 
admission  into  the  inns?     I  should  say  when  they  are  benighted, 
and  when,  from  any  casualty,  or  from  the  badness  of  the  roads, 
they  arrive  at  an  inn  at  a  very  late  hour.     Indeed,  in  former  times. 


8  BASES    OF    PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

when  the  roads  were  much  worse,  and  were  much  infested  with 
robbers,  a  late  hour  of  the  night  was  the  time,  of  all  others,  at  which 
the  traveller  most  required  to  be  received  into  an  inn.  I  think, 
therefore,  that  if  the  traveller  conducts  himself  properly,  the  inn- 
keeper is  bound  to  admit  him,  at  whatever  hour  of  the  night  he 
may  arrive.  The  only  other  question  in  this  case  is,  whether  the 
defendant's  inn  was  full.  There  is  no  distinct  evidence  on  the 
part  of  the  prosecution  that  it  was  not.  But  I  think  the  conduct  of 
the  parties  shews  that  the  inn  was  not  full ;  because,  if  it  had  been, 
there  could  have  been  no  use  in  the  landlady  asking  the  prosecutor 
his  name,  saying,  that  if  he  would  tell  it,  she  would  ring  for  one  of 
the  servants.  Verdict  —  Guilty.^ 

Park,  J.,  sentenced  the  defendant  to  pay  a  fine  of  205. 

3  In  Lane  v.  Cotton  (1701),  12  Mod.  472,  Holt,  C.  J.,  in  sjieaking  of 
those  engaged  in  common  callings,  said :  "  Wherever  any  Subject  takes 
upon  himself  a  Publick  Trust  for  the  Benefit  of  the  rest  of  his  fellow  Sub- 
jects, he  is  eo  ipso  bound  to  serve  the  Subject  in  all  the  Things  that  are 
within  the  Reach  and  Comprehension  of  such  an  Office,  under  Fain  of 
an  Action  against  him;  and  for  that  see  Kelway  50.  If  on  the  Road  a 
Shoe  fall  off  my  Horse,  and  I  come  to  a  Smith  to  have  one  put  on,  and  the 
Smith  refuse  to  do  it,  an  Action  will  lie  against  him,  because  he  has  made 
Profession  of  a  Trade  which  is  for  the  Publick  Good,  and  has  thereby  ex- 
posed and  vested  an  interest  of  himself  in  all  the  King's  Subjects  that  will 
employ  him  in  the  Way  of  his  Trade.  If  an  Inn-keeper  refuse  to  entertain 
a  Guest,  when  his  House  is  not  full,  an  Action  will  lie  against  him  ;  and 
so  against  a  Carrier,  if  his  Horses  be  not  loaded,  and  he  refuse  to  take  a 
Packet  proper  to  be  sent  by  a  Carrier;  and  I  have  known  such  Actions 
maintained,  tho'  the  Cases  are  not  reported.  ...  If  the  Inn  be  full,  or  the 
Carrier's  Horses  loaded,  the  Action  would  not  lie  for  such  Refusal ;  but  one 
that  has  made  Profession  of  a  public  Employment,  is  bound  to  the  utmost 
Extent  of  that  Employment  to  serve  the  Publick." 

Mr.  Justice  Holmes,  in  his  work  on  The  Common  Law,  p.  203,  after 
quoting  from  Lane  v.  Cotton,  supra,  to  the  effect  that  "  If  a  man  takes  upon 
himself  a  public  employment,  he  is  bound  to  serve  the  public  as  far  as  the 
employment  extends,  and  for  refusal  an  action  lies,"  says :  "  An  attempt 
to  apply  this  doctrine  at  the  present  day  would  be  thought  monstrous. 
But  it  formed  part  of  a  consistent  scheme  for  holding  those  who  followed 
useful  callings  up  to  the  mark.  .  .  .  The  scheme  has  given  way  to  more 
liberal  notions;  but  the  disjecta  membra  still  move." 

See  a  valuable  article  entitled  Business  Jurisprudence,  by  Edward  A. 
Adler,  in  28  Harvard  Law  Review,  135. 

The  survivors  of  the  ancient  common  callings  are  the  common  carrier  by 
land  and  water,  and  the  innkeeper.  See  an  article  on  The  Origin  of  the 
Peculiar  Duties  of  Public  Service  Companies,  11  Columbia  Law  Review,  514, 
523  to  525.     And  see  Hurley  v.  Eddington   (1901),  1.56  Ind.  415. 

In  Gisbourne  v.  Hurst  (1710),  1  Salk.  240,  it  was  resolved  "that  any 
man  undertaking  for  hire  to  carry  the  goods  of  aU  persons  indifferently,  as 
in  this  case,  is  as  to  this  privelege  a  common  carrier." 

In  Fay  v.  I'acific  Improvement  Co.  (181)2),  03  Cal.  253,  the  court  said: 
"The  fact  that  the  house  is  open  for  the  public,  that  those  who  patronise  it 
come  to  it  upon  the  invitation  which  is  extended  to  the  general  public,  and 
without  any  previous  agreement  for  accommodation  or  agreement  as  to  the 
duration  of  their  stay,  marks  the  important  distinction  between  a  hotel  or 
inn,  and  a  boarding-house." 


SEC.    I.]  THE   COMMON    CALLINGS.  9 

PULLMAN;  PALACE  CAR  CO.  v.  LAWRENCE. 

74  Miss.  782.     1897.^ 

Woods,  C.  J.  We  now  proceed  to  consider  the  law  of  the  liabil- 
ity of  the  appellant  in  the  present  case.  We  need  hardly  say  that 
the  law  of  the  state  of  Illinois  is  that  to  which  we  must  look  to 
ascertain  whether  a  cause  of  action  is  shown,  and  to  determine  the 
extent  and  measure  of  the  recovery  sought,  if  appellee  was  entitled 
to  recover  at  all.  ...  It  must  be  conceded,  further,  that  the 
Pullman  Palace  Car  Company  is  not  technically  a  common  carrier 
in  the  state  of  Illinois.  Our  constitution  has  wisely  declared  all 
sleeping  car  companies  common  carriers,  but  such  is  not  the  law 
in  Illinois.  In  Illinois,  as  in  many  other  states,  sleeping  car  com- 
panies are  regarded  as  nondescript  corporations  —  sui  generis.  By 
these  authorities  they  are  said  to  be  neither  common  carriers  nor 
innkeepers.  And  yet  they  bear  some  marked  resemblance  to  both. 
They  are  under  the  duty  of  not  only  furnishing  seats  in  their  cars 
to  all  proper  persons  applying  therefor,  but  they  are  also  under 
the  obligation  in  all  proper  cases,  and  to  the  extent  of  their  ability 
and  capacity,  to  furnish  sleeping  accommodations  and  food  to  the 
travelling  public,  for  proper  compensation.  They  therefore  seem 
to  possess  some  of  the  characteristics  of  innkeepers.  And  they 
seeni  to  be  quasi  common  carriers.  They  own  and  use  railway 
cars  affording  many  comforts,  conveniences  and  luxuries  unknown 
to  first-class  ordinary  cars  of  railroad  companies,  and  these  cars 
are  to  be  used  in  the  transportation  of  passengers  from  point  to 
point,  and  the  general  travelling  public  is  invited  to  become  patrons 
of  the  company  owning  and  using  these  luxurious  coaches.  The 
company  is,  in  some  sense,  engaged  in  transportation,  and  its  busi- 
ness is  with  the  general  public.  It  is  unlike  the  private  carrier, 
who  may  select  his  own  customers,  for  it  must  take  all  who  are 
proper  persons,  and  who  pay  the  demanded  fare.  So,  though  not 
technically  a  common  carrier  in  Illinois,  it  bears  marked  resem- 
blance to  the  common  carrier,  and  must  be  held  to  the  perform- 
ance of  its  appropriate  duties  in  its  business  intercourse  with  the 
travelling  public.^ 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  En. 

2  See  also  Nevin  v.  Pullman  Palace  Car  Co.  (1883),  100  111.  222;  Pullman 
Palace  Car  Co.  v.  Booth  (Tex.,  1894),  28  S.  W.  719;  Searles  v.  Mann 
Boudoir  Car  Co.  (1891),  45  Fed.  330;  Lemon  v.  Pullman  Palace  Car  Co. 
(1887),  52  Fed.  262.     And   see  Interstate  Commerce  Act,   §   1,  Appendix, 

p.  482,  as  to  Sleeping  Car  Companies. 


"10  BASES    OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

STATE  V.  BELL  TELEPHONE  CO. 

23  Fed.  539.  1885.^ 
\'  This  was  an  application  on  the  part  of  the  Baltimore  &  Ohio 
>Sr%^  Telegraph-. Company  to  compel  the  defendant  to  give  the  petifioner 
telephone  service.  The  defendant  answered  that  it  operated  under 
a  license  obtained  from  the  American  Bell  Telephone  Company, 
by  the  terms  of  which  defendant  could  only  give  service  to  telegraph 
companies  with  the  consent  of  the  licenser,  and  that  the  licenser 
permitted  service  to  be  given  to  the  Western  Union  Telegraph  Com- 
pany, but  would  not  allow  service  to  be  given  to  the  petitioner. 

Brewer,  J.  So,  notwithstanding  this  licenser  has  given  to  the 
licensee  the  right  to  establish  a  telephonic  system  in  the  city  of  St. 
Louis,  with  telephonic  communication  with  only  certain  prescribed 
telegraph  systems,  the  moment  it  permitted  the  establishment  of  a 
telephonic  system  here,  that  moment  it  put  such  telephonic  system 
within  the  control  of  the  state  of  Missouri,  and  the  control  of  the 
courts,  enforcing  the  obligations  of  a  common  carrier. 

A  telephonic  system  is  simply  a  system  for  the  transmission  of 
intelligence  and  news.  It  is,  perhaps,  in  a  limited  sense,  and  yet 
in  a  strict  sense,  a  common  carrier.  It  must  be  equal  in  its  dealings 
with  all.  It  may  not  say  to  the  lawyers  of  St.  Louis,  "  my  license 
is  to  establish  a  telephonic  system  open  to  the  doctors  and  mer- 
chants, but  shutting  out  you  gentlemen  of  the  bar."  The  moment 
it  establishes  a  telephonic  system  here  it  is  bound  to  deal  equally 
with  all  citizens  in  every  department  of  business.^ 


Section  2. 

Exercise  of  Franchises.^ 

LUMBARD  V.  STEAENS. 
4  Cush.  GO.     1849. 
The  facts  of  this  case,  which  was  a  bill  in  equity  for  an  injunc- 
tion, are  stated  in  the  opinion  of  the  court. 

1  The  statement  of  facts  is  condenssed,  only  part  of  the  opinion  of 
Brewer,  J.,  is  reprinted,  and  the  dissenting  opinion  of  Trent,  J.,  is 
omitted. —  Ed. 

2  In  Commercial  Union  Tel.  Co.  v.  New  England  T.  &  T.  Co.  (1889), 
61  Vt.  241,  a  telephone  company  is  spoken  of  as  "  a  common  carrier  of 
speech  for  hire."  See  also  State  v.  Nebraska  Telephone  Co.  (Neb.,  1885), 
22  N.  W.  237,  and  Bell  Telephone  Co.  v.  Commonwealth  (Pa.,  1886),  3 
Atl.  825. 

1  "  What  is  a  franchise?     Under  the  English  law  Blackstone  defines  it  as 
a   royal   privilege,   or   branch   of   the   king's   prerogative,   subsisting   in   the 


SEC.    II.]  EXERCISE   OF   FRANCHISES.  11 

Shaw,  C.  J.  Tins  bill  was  originally  brought  by  the  plaintiff 
as  an  owner  of  mills  on  the  lower  part  of  Town  brook,  in  Spring- 
field, against  the  defendant  Stearns,  alleging  that  by  means  of  an 
aqueduct,  on  his  own  land,  he  had  diverted  some  portion  of  the 
water  of  two  springs,  being  some  of  the  sources  of  said  brook,  and 
thereby  diminished  the  plaintiff's  water  power.  Whilst  this  bill  was 
pending  and  before  answer  filed,  an  act  was  passed  by  the  legislature 
on  the  10th  of  May,  1848  (St.  1818,  c.  303),  entitled  "An  act  to 
incorporate  the  Springfield  Aqueduct  Company." 

This  act  authorized  the  taking  of  the  sjirings  before  mentioned 
of  Stearns,  by  jDurchase,  and  with  certain  other  springs,  the  laying 
of  an  aqueduct  for  the  purpose,  expressed  in  the  act,  of  supplying 
the  village  of  Springfield  with  pure  water.  The  act  contains  the 
provisions  usual  in  such  acts,  for  forming  a  company  and  raising 
a  capital;  for  taking  springs  and  lands,  paying  all  damages;  for 
digging  up  roads  and  ways;  providing  hydrants;  for  a  gratuitous 
supply  of  water,  in  case  of  fire ;  a  penalty  for  corrupting*  the  water ; 
and  vesting  certain  superintending  powers  in  the  board  of  health 
of  Springfield,  and  the  county  commissioners  of  Hampden,  re- 
spectively. After  the  passage  of  this  act,  a  supplemental  bill  was 
filed,  making  the  aqueduct  company  a  party,  and  insisting  on  the 
same  grounds  against  them,  as  stated  in  the  original  bill. 

It  is  contended,  that  this  act  is  unconstitutional  and  void,  because 
it  in  eifect  authorizes  the  corporation  to  take  private  rights  of  prop- 
erty for  a  use  which  is  not  a  public  one,  and,  therefore,  not  within 
the  authority  of  the  legislature,  even  though  provision  is  therein 
made  for  a  compensation  for  any  such  damage.^     It  may  be  very 

hands  of  a  subject.'  2  Bl.  Com.  37.  Generalized  and  divested  of  the  spe- 
cial form  which  it  assumes  under  a  monarchial  government  based  on  feudal 
traditions,  a  franchise  is  a  right,  privilege  or  power  of  public  concern, 
which  ought  not  to  be  exercised  by  private  individuals  at  their  mere  will 
and  pleasure,  but  should  be  reserved  for  public  control  and  administration, 
either  by  the  government  directly,  or  by  public  agents,  acting  under  such 
conditions  and  regulations  as  the  government  may  impose  in  the  public 
interest,  and  for  the  public  securitj^  Such  rights  and  powers  must  exist 
under  every  form  of  society.  They  are  always  educed  by  the  laws  and 
customs  of  the  community.  Under  our  system,  their  existence  and  disposal 
are  under  the  control  of  the  legislative  department  of  the  government,  and 
they  cannot  be  assumed  or  exercised  without  legislative  authority.  .  .  .  Pso 
private  person  can  take  another's  property,  even  for  a  public  use,  without 
such  authority  ;  which  is  the  same  as  to  say  that  the  right  of  eminent  do- 
main can  only  be  exercised  by  virtue  of  a  legislative  grant.  This  is  a  fran- 
chise. No  persons  can  make  themselves  a  body  corporate  and  politic  without 
legislative  authority.  Corporate  capacity  is  a  franchise."  California  v. 
J^acific  Railroad  Co.   (lSSSTn27  U.'TTT,  40.  ^^"^ 

1  By  force  of  the  Fifth  and  Fourteenth  Amendments  to  the  Federal  Con- 
stitution private  property  cannot  be  taken  under  the  power  of  eminent 
domain  except  for  public  use.  Missouri  Pacific  Ry.  Co.  v.  Nebraska  (189tj), 
164  U.  S.  403;  Madisonville  Traction  Co.  v.  St.  Bernard  Mining  Co.  (1905), 
19C  U.  S.  239.  We  do  not  here  take  up  exhaustively  the  question  of  what 
constitutes  such  public  use  as  to  justify  the  grant'  of  the  power  of  emi- 
nent domain.  Such  inquiry  belongs  properly  in  a  course  on  Constitutional 
Law. —  Ed. 


12  BASES    OF   PUBLIC    SERVICE   DUTIES,  [CHAP.    I. 

questionable,  whether  the  plaintiff,  taking  the  use  of  the  brook  for 
a  mill  power,  does  not  take  it  subject  to  the  reasonable  use  of  all 
proprietors  above,  in  or  near  whose  premises  it  passes,  for  domestic 
purposes,  for  such  ordinary  trades  as  require  the  use  of  water,  such 
as  tanning,  bleaching,  dyeing,  and  the  like,  and  also  for  the  ex- 
tinguishment of  fires.  If  such  be  the  right  of  the  inhabitants  to  the 
use  of  the  water,  it  may  be  a  question,  whether  it  is  a  greater  en- 
croachment on  the  plaintiff's  rights,  to  take  water  by  conduits  and 
hydrants,  than  by  buckets  and  engines.  But  as  this  right  may  in- 
volve a  question  of  fact,  which  this  case  has  not  reached,  in  its  pres- 
ent stage,  we  lay  no  stress  on  this  consideration,  but  merely  suggest 
it  in  passing. 

But  we  can  perceive  no  ground,  on  which  to  sustain  the  argu- 
ment, that  this  act  does  not  declare  a  public  use.  It  is  so  expressed 
in  its  title,  and  in  the  first  enacting  clause,  and  the  entire  act  is 
conformable  to  this  view.  The  supply  of  a  large  number  of  in- 
habitants with  pure  water  is  a  public  purpose.  But  it  is  urged,  as 
an  objection  to  the  constitutionality  of  the  act,  that  there  is  no  ex- 
press provision  therein  requiring  the  corporation  to  supply  all  fami- 
lies and  persons  who  should  apply  for  water,  on  reasonable  terms; 
that  they  may  act  capriciously  and  oppressively;  and  that  by  fur- 
nishing some  houses  and  lots,  and  refusing  a  supply  to  others,  they 
may  thus  give  a  value  to  some  lots,  and  deny  it  to  others.  This 
would  be  a  plain  abuse  of  their  franchise.  ^By  accepting  the  act  of 
incorporation,  they  undertake  to  do  all  the  public  duties  required 
by  it,  ^  When  an  individual  or  a  corporation  is  guilty  of  a  breach 
of  public  duty,  by  misfeasance  or  nonfeasance,  and  the  law  has  pro- 
vided no  other  specific  punishment  for  the  breach,  an  indictment 
will  lie.  Perhaps  also,  in  a  suitable  case,  a  process  to  revoke  and 
annul  the  franchise  might  be  maintained.  But  it  is  the  less  im- 
portant to  determine  this  question,  because  this  charter  is  subject 
to  the  provision  in  the  Eev.  Sts.  c.  44,  §  23 ;  by  which  it  is  com- 
petent for  the  legislature  to  make  such  alterations  and  amendments, 
as  more  effectually  to  carry  into  effect  all  the  purposes  of  the  act. 

The  court  are  of  opinion  that  this  act  is  not  open  to  the  objec- 
tions made  to  it,  and  that  it  is  not  unconstitutional. 

Bill  dismissed. 


SEC.    II.]  EXERCISE  OF  FRANCHISES.  13 


OLMSTEAD  v.  PEOPRIETORS  OF  THE  MORRIS 
AQUEDUCT. 

47  N.  J.  L.  311.     1885.^ 

The  questions  involved  in  this  case  arose  under  an  application 
made  by  the  Proprietors  of  the  Morris  Aqueduct  for  the  appoint- 
ment of  commissioners  to  condemn  for  their  uses  all  the  waters  of  a 
certain  spring  called  Sandy  Spring,  and  a  certain  specified  portion 
of  the  waters  of  Mills  Bailey  Brook.  The  fourth  reason  assigned 
by  the  plaintiffs  in  error  for  asking  that  the  appointment  of  com- 
missioners be  set  aside  was  that  the  law  under  which  the  Proprietors 
had  proceeded  was  not  constitutional. 

Van  Stckel,  J.  The  presumption  is  always  in  favor  of  the  va- 
lidity of  legislative  acts.  If  no  obligation  rested  upon  the  water 
company  to  supply  on  reasonable  terms  all  who  apply  for  water,  the 
use  would  be  strictly  private.  The  duty  of  furnishing  the  public 
with  water  must  be  present,  to  make  it  of  a  public  character. 

Although  the  legislative  act  may  contain  no  express  provision 
imposing  such  duty,  the  presumption  is  that  the  legislature 
intended  to  act  within  constitutional  limits  by  creating  a  public 
franchise,  and  that  the  grant  to  the  company  was  for  the  purpose 
of  providing  for  the  public  necessity  and  convenience. 

The  powers  granted  to  the  water  company  are  unquestionably 
capable  of  being  employed  as  a  means  of  great  public  usefulness, 
and  hence  their  creation  was  a  legitimate  act  of  legislation.  An  in- 
tention that  they  shall  be  used  otherwise  will  not  be  imputed  to  the 
law-making  power,  nor  will  the  grantee  be  permitted  to  pervert  them 
to  uses  for  which  they  could  not  lawfully  be  bestowed. 

In  accepting  such  a  charter  the  company  impliedly  engages  on 
its  part  to  use  it  in  such  manner  as  will  accomplish  the  object  for 
which  the  legislature  designed  it.  It  cannot  refuse  to  perform  the 
public  duties  thus  cast  upon  it,  without  surrendering  the  franchise. 
When  an  individual  or  a  corporation  is  guilty  of  a  breach  of  public 
duty  by  misfeasance  or  nonfeasance,  the  law  provides  a  remedy. 

The  true  criterion  by  which  to  judge  of  the  character  of  the  use 
is,  whether  the  public  may  enjoy  it  of  right,  or  by  permission  only!) 
Bonaparte  v.  Camden  and  Amboy  R.  R.  Co.,  Baldwin  C.  C.  205. 

Assuming,  as  we  must,  that  the  legislature  intended  to  exercise 
its  lawful  power,  and  that  the  company,  in  invoking  the  benefit  of 
the  corporating  act,  took  upon  it  itself  the  correlative  obligation 

1  The  statement  of  facts  is  somewhat  condensed,  the  arguments  of  counsel 
are  omitted,  and  only  part  of  the  opinion  is  reprinted. —  Ed. 


14  BASES    OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

to  serve  the  public,  it  necessarily  follows  that  the  use  is  a  public 
one.  I  agree  with  Mr.  Justice  Parker,  who  delivered  the  opinion  in 
the  court  below,  that  if  the  supplying  of  a  city  or  town  with  water 
is  not  a  public  purpose,  it  is  difficult  to  conceive  of  any  enterprise 
entrusted  to  a  private  corporation  that  could  be  classed  under  that 
head. 

The  supplement  of  1880  to  the  act  concerning  telegraph  com- 
panies contains  no  express  words  imposing  the  duty  to  send  mes- 
sages for  all  who  apply.  In  Turnpike  Company  v.  News  Company, 
1-4  Vroom  381,  the  Supreme  Court  maintained  the  constitutionality 
of  the  law  as  constituting  a  public  use,  on  the  ground  that  there 
must  be  an  implication  that  in  granting  the  franchise,  the  legislature 
intended  to  charge  the  companies  with  a  duty  to  the  public,  and 
that  in  accepting  the  benefits  of  the  law,  the  recipient  of  them  as- 
sumes the  performance  of  such  public  duty. 

The  case  of  Paterson  Gas  Light  Company  v.  Brady,  3  Butcher 
245,  is  cited  in  support  of  the  contrary  contention.  In  that  case 
Mr.  Justice  Elmer  declared  that  the  company  was  under  no  legal 
obligation  to  supply  gas  to  all  persons  having  buildings  on  the  lines 
of  their  pipes,  upon  tender  of  reasonable  compensation.  He  rested 
this  view  upon  the  absence  of  any  express  provision  in  the  charter 
imposing  such  duty  upon  the  company.  This  decision  fails,  how- 
ever, to  give  due  effect  to  the  purpose  of  the  legislature  in  creating 
the  company,  and  to  the  implied  obligation  assumed  by  the  company 
in  accepting  the  grant.  If  it  were  a  grant  for  mere  private  uses,  em- 
powering the  corporate  body  to  withhold  service  at  pleasure  from  all 
persons,  the  company  would  be  without  the  right  to  occupy  the 
public  streets  for  the  laying  of  its  pipes,  and,  of  course,  the  grant 
of  eminent  domain  for  such  private  purposes  would  be  void. 

In  this  respect,  in  my  judgment,  the  conclusion  in  the  Paterson 
case  was  erroneous,  and  in  conflict  with  the  views  expressed  in  the 
Tide-water  case,^  and  in  National  Docks  v.  Central  Eailroad  Com- 
pany.^ 

In  my  opinion  the  judgment  below  should  be  affirmed. 


HAUGEN  V.  ALBINA  LIGPIT  &  POWEH  CO. 

21  Ore.  411.     1891.^ 
Tins  is  an  action  for  a  writ  of  mandamus  to  require  the  defendant 

2  Tidewater  Co.  v.  Coster  (1866),  3  C.  E.  Green  518. 

3  (1880)   5  Stew.  Eq.  T.'w. 

i  The  statement  of  facts  is  condensed,  and  part  of  the  opinion  is  omit- 
ted.— Ed. 


SEC.   II.]  EXERCISE   OF  FRANCHISES.  15" 

to  supply  the  plaintiff  with  water  by  tapping  a  certain  water  main 
on  Tillamook  street,  and  allowing  him  to  connect  therewith  a  serv- 
ice-pipe. 

The  plaintiff'  is  a  resident  of  the  city  of  Albina,  and  owns  a  lot 
on  Tillamook  street,  on  which  he  is  constructing  a  residence.  The 
defendant  is  a  corporation  supplying  water  to  the  inhabitants  of 
the  city  of  iVlbina  and  is  operating  under  a  franchise  granted  to 
said  company  by  the  council  of  the  city  of  Albina  by  virtue  of  an 
ordinance,  as  follows  \  "  An  ordinance  granting  the  right  of  way 
through  the  streets  for  laying  pipes  for  the  purpose  of  conveying 
water  through  the  city.  The  city  of  Albina  does  ordain  as  fol- 
lows: Section  1.  That  the  Albina  Water  AVorks  Compan}'-,  its 
successors  and  assigns,  be  and  are  hereby  granted  the  right  and 
privilege  of  laying  pipes  through  the  streets  of  Albina,  for  the 
purposes  of  conducting  water  through  the  city.  Section  2.  That  the 
ditches  for  laying  pipes  shall  be  sunk  two  feet,  and  the  pipes  for 
conducting  the  water  shall  be  under  the  surface  or  level  of  the 
established  grade  eighteen  or  twenty  inches  on  all  improved  streets, 
and  no  pipe  shall  be  laid  so  as  to  interfere  with  the  construction  of 
sewers;  provided,  that  nothing  in  this  ordinance  shall  be  construed 
so  as  to  grant  any  exclusive  right  or  privilege  of  conducting  water 
into  the  city ;  provided  further,  that  said  water-  company  shall  in 
no  case  charge  more  than  one  dollar  per  month  for  the  first  faucet 
and  fifty  cents  for  each  additional  faucet  in  the  same  building,  for 
family  use  or  at  a  private  dwelling  house,"  etc.  Under  this  ordi- 
nance the  defendant  company  laid  down  a  four  inch  pipe  through 
Tillamook  street,  but  refused  to  supply  water  from  said  pipe  to 
plaintiff's  residence  though  requested  to  do  so,  and  though  tendered 
by  the  plaintiff  the  regular  fee  for  tapping  a  water  main  with  a 
service  pipe.  A  demurrer  was  sustained  to  the  answer,  and  a  judg- 
ment rendered  making  the  writ  peremptory,  from  which  defendant 
appeals. 

Lord,  J.  From  this  statement  of  the  case,  as  presented  by  the 
pleadings,  the  court  below  held  that  when  the  defendant  entered 
upon,  and  laid  down  its  water-mains  in  the  street,  in  pursuance 
of  the  privilege  granted  by  the  ordinance,  it  became  bound  to  sup- 
ply every  abutter  upon  the  street  with  water. 

The  contention  for  the  defendant  is,  that  the  ordinance  does  not 
impose  the  duty  upon  it  to  furnish  water,  but  only  if  it  shall  furnish 
water,  that  the  charge  therefor  shall  not  exceed  a  certain  sum  therein  . 
specified ;  that  the  grant  is  to  lay  pipes  through  the  streets,  for  the 
purpose  of  conducting  water  through  the  city  in  the  mode  pre- 
scribed, and  so  as  not  to  interfere  with  the  construction  of  sewers, 
but  that  it  contains  no  provision  requiring  it  to  supply  the  city  or 


16  BASES  OF  PUBLIC   SERVICE  DUTIES.  [CHAP.   I. 

its  inhabitants  with  water,  hence  the  ordinance  imposes  no  duty 
upon  the  company  to  furnish  water  to  any  one. 

In  whatever  form  the  argument  is  presented,  it  rests  essentially 
upon  this  contention.  While  admitting  that  it  is  a  corporation 
organized  to  supply  the  city  and  its  inhabitants  with  water,  and 
that  the  city  by  its  ordinance  granted  it  the  right  to  lay  water- 
mains  through  its  streets  for  the  purposes  of  carrying  into  effect 
the  objects  of  its  incorporation,  it  insists  that  the  ordinance  is  the 
measure  of  the  rights  conferred  and  the  obligation  imposed,  which, 
by  its  terms,  only  grants  "  the  right  and  privilege  of  laying  pipes 
through  the  streets  of  the  city  of  Albina  for  the  purpose  of  con- 
ducting water  through  the  city,"  under  the  conditions  imposed,  with- 
out "  a  word  in  the  language  of  the  grant  from  which  it  could  be  in- 
ferred that  the  company  is  placed  under  any  obligation  whatever 
to  supply  any  inhabitant  of  the  city  with  water." 

Counsel  say :  "  If  the  ordinance  had  imposed  upon  the  company 
the  duty  of  supplying  the  inhabitants  with  water  as  a  part  of  the 
conditions  of  the  grant,  such  a  conclusion  might  be  supported ;  but 
where  no  such  duty  is  imposed,  and  nothing  is  said  except  that 
when  the  company  furnishes  water,  it  shall  charge  no  more  than 
a  certain  rate  per  month,  they  fail  to  see  the  soundness  of  the  reason- 
ing which  makes  it  the  duty  of  the  company  to  furnish  water." 

It  is  thus  seen  that  it  is  the  absence  of  any  express  provision  in 
the  ordinance,  imposing  the  duty  upon  the  defendant  to  supply 
water,  upon  which  the  argument  and  the  case  for  the  defendant  is 
predicated.  The  effect  to  be  given  to  the  fact  that  the  defendant 
company  was  incorporated  under  the  law  to  furnish  water  to  the 
city  and  its  inhabitants,  and  the  implied  obligation  which  the  de- 
fendant assumed  by  accepting  the  grant  or  franchise  under  the 
ordinance,  is  entirely  overlooked.  The  defendant  is  treated  as  a 
private  corporation,  the  business  of  which  is  private  and  not  of  a 
public  nature,  and  to  meet  a  public  necessity,  and  as  a  consequence, 
that  it  should  not  be  subjected  to  duties  or  obligations  that  are 
not  binding  upon  other  private  corporations.  In  support  of  this 
view,  tlie  only  authority  cited  and  relied  upon  by  the  defendant  is 
Paterson  Gas  Light  Co.  v.  Brady,  27  N.  J.  L.  245;  72  Am.  Dec. 
360. 

In  that  case  the  court  was  urged  to  assert  the  doctrine  that  gas 
companies,  like  common  carriers  and  innkeepers,  were  bound  tO' 
accommodate  the  public,  but  refused  on  the  ground  that  the  lack 
of  precedents  upon  the  subject  could  only  be  based  upon  the  strong 
presumption  that  there  was  no  principle  of  law  upon  which  such  a 
view  could  be  supported.  The  court  says :  "  The  company  may 
organize,  may  make  and  sell  gas  or  not  at  their  pleasure;  and  I  see 


SEC.    II.]  EXERCISE   OF   FRANCHISES.  17 

no  more  reason  to  hold  that  the  duty  of  doing  so  is  meant  to  be 
imperative  than  to  hold  that  other  companies  incorporated  to  carry 
on  manufactories,  or  to  do  any  other  business,  are  bound  to  serve 
the  public  any  further  than  they  find  it  to  be  their  interest  to  do  so. 
It  was  earnestly  insisted  on  the  argument  that  the  community  has  a 
great  interest  in  the  use  of  gas,  and  that  companies  set  up  to  fur- 
nish it  ought  to  be  treated  like  innkeepers  and  common  carriers, 
and  that  if  no  precedent  can  be  found  for  such  a  decision,  this 
court  ought  to  make  one.  But  that  there  is  no  authority  for  so 
holding  in  England  or  America,  where  companies  have  been  so 
long  incorporated  for  supplying  water  and  gas  to  the  inliabitants  of 
numerous  towns  and  cities,  affords  a  strong  presumption  that  there 
is  no  principle  of  law  upon  which  it  can  be  supported." 

But  this  case  and  its  reasoning  was  directly  disapproved  and 
overruled  in  the  subsequent  case  of  Olmstead  v.  Proprietors  of  Mor- 
ris Aqueduct,  47  N".  J.  L.  333,  in  which  the  court  says :  "  In  that 
case, —  Paterson  Gas  Light  Co.  v.  Brady, —  Mr.  Justice  Elmer  de- 
clared that  the  company  was  under  no  legal  obligation  to  supply 
gas  to  all  persons  having  buildings  on  the  line  of  their  pipes,  upon 
tender  of  reasonable  compensation.  He  rested  this  view  on  the 
absence  of  any  express  provision  in  the  charter  imposing  such  duty 
upon  the  company.  This  decision  fails,  however,  to  give  due  effect 
to  the  purpose  of  the  legislature,  in  creating  the  company  and  to 
the  implied  obligation  assumed  by  the  company  in  accepting  the 
grant.  If  it  were  a  grant  for  mere  private  uses  empowering  the 
corporate  body  to  withhold  service  at  pleasure  from  all  persons,  the 
company  would  be  without  the  right  to  occupy  the  public  streets  for 
the  laying  of  its  pipes,  and  of  course  the  grant  of  eminent  domain 
for  such  private  purposes  would  be  void.  In  this  respect,  in  my 
judgment,  the  conclusion  in  the  Paterson  case  was  erroneous,  and 
in  conflict  with  the  views  expressed  in  Tide  Water  Co.  v.  Coster,  3 
C.  E.  Green,  518;  90  Am.  Dec.  634,  and  in  Nat.  Docks  Ey.  Co.  v. 
Cent.  E.  Co.  5  Stew.  Eq.  755." 

This  view  is  certainly  more  in  accord  with  recent  decisions  estab- 
lishing the  doctrine  that  it  is  mandatory  upon  corporations  of  this 
sort  to  supply  one  and  all  without  distinction.  The  defendant  by 
incorporating,  under  the  statute  for  the  purpose  of  supplying  water 
to  the  city  and  its  inhabitants,  undertook  a  business  which  it  could 
not  have  carried  on  without  the  grant  of  eminent  domain  over  the 
streets  in  which  to  lay  its  pipes.  It  was  by  incorporating  for  this 
purpose,  and  in  accepting  the  grant,  it  became  invested  with  a  fran- 
chise, belonging  to  the  public  and  not  enjoyed  of  common  right,  for 
the  accomplishment  of  public  objects  and  the  promotion  of  the 
public  convenience  and  comfort.     Its  business  was  not  of  a  private. 


18  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

but  of  a  public  nature,  and  designed  under  the  conditions  of  the 
grant  as  well  for  the  benefit  of  the  public  as  the  company. 

"  Such  a  business,"  says  Mr.  Justice  Harlan,  "  is  not  like  that 
of  an  ordinary  corporation  engaged  in  the  manufacture  of  articles 
that  may  be  quite  as  indispensable  to  some  persons  as  are  gas  lights. 
The  former  articles  may  be  supplied  by  individual  efEort,  and  with 
their  supply  the  government  has  no  such  concern  that  it  can  grant 
an  exclusive  right  to  engage  in  their  manufacture  and  sale,  but  as 
the  distribution  of  gas  in  thickly  populated  districts  is,  for  the 
reason  stated  in  other  cases,  a  matter  of  which  the  public  may 
assume  control,  services  rendered  in  supplying  it  for  public  and 
private  use,  constitute,  in  our  opinion,  such  public  services  as, 
under  the  constitution  of  Kentucky,  authorized  the  legislature  to 
grant  to  the  defendant  the  exclusive  privileges  in  question." 
(Louisville  Gas  Co.  v.  Citizens  Gas  Co.  115  U.  S.  683.)  And,  in 
another  case,  the  same  eminent  judge  said :  "  The  manufacture 
of  gas  and  its  distribution  for  public  and  private  use,  by  means  of 
pipes  laid  down,  under  legislative  authority,  in  the  streets  and 
ways  of  a  city,  is  not  an  ordinary  business  in  which  every  one  may 
engage,  but  is  a  franchise  belonging  to  the  government  to  be  granted 
for  the  accomplishment  of  public  objects,  to  whomsoever,  and  upon 
what  terms,  it  pleases.  It  is  a  business  of  a  public  nature,  and  meets 
a  public  necessity,  for  which  the  state  may  make  provision."  (New 
Orleans  Gas  Co.  v.  Louisiana  Light  Co.  115  U.  S.  650.) 

It  must  then  be  conceded  that  the  defendant  is  engaged  in  a 
business  of  a  public  and  not  of  a  private  nature,  like  that  of  ordinary 
corporations  engaged  in  the  manufacture  of  articles  for  sale,  and 
that  the  right  to  dig  up  the  streets,  and  place  therein  pipes  or 
mains  for  the  purpose  of  conducting  water  for  the  supply  of  the 
city  and  its  inhabitants,  according  to  the  express  purpose  of  its  in- 
corporation, and  the  business  in  which  it  is  engaged,  is  a  franchise, 
the  exercise  of  which  could  only  be  granted  by  the  state,  or  the 
municipality  acting  under  legislative  authority.  In  such  case,  how 
can  the  defendant,  upon  the  tender  of  the  proper  compensation, 
refuse  to  supply  water  without  distinction  to  one  and  all  whose  prop- 
erty abuts  upon  the  street  in  which  its  pipes  are  laid?  The  de- 
fendant company  was  organized  to  supply  water  to  the  city  and  its 
inhabitants,  and  the  franchise  granted  by  the  city  authorities  was 
the  means  necessary  to  enable  it  to  effect  that  purpose.  Without 
the  franchise,  the  object  for  which  the  company  was  incorporated 
would  fail  and  come  to  naught.  It  could  not  carry  on  the  busi- 
ness of  supplying  the  city  and  its  inhabitants  with  water  without 
authority  from  the  city  to  dig  its  streets  and  lay  pipes  therein  for 
conducting  or  distributing  water  for  public  and  private  use.     It 


SEC.    II.]  EXERCISE   OF   FRANCHISES.  19 

was  not  organized  to  lay  pipes  but  to  supply  water,  and  the  grant 
was  to  enable  it  to  do  so  and  thereby  effect  the  public  purpose  con- 
templated. 

When  the  defendant  incorporated  to  carry  on  such  a  business,  we 
may  reasonably  assume  that  it  was  with  the  expectation  of  receiv- 
ing a  franchise  from  the  city,  which,  when  conferred,  it  would 
undertake  to  carry  on  according  to  the  purposes  for  which  it  was 
organized.  By  its  acceptance  of  the  grant,  under  the  terms  of  its 
incorporation,  it  assumed  the  obligation  of  supplying  the  city  and 
its  inhabitants  with  water  along  the  line  of  its  mains.  It  could 
not  dig  up  the  streets  and  lay  pipes  therein  for  conducting  water, 
except  to  furnish  the  city  and  its  inhabitants  with  water.  That 
was  the  purpose  for  which  it  became  a  corporation,  and  the  grant 
of  the  city  was  to  enable  it  to  carry  it  into  effect.  And  "  if  the 
supplying  of  a  city  or  town  with  water,"  as  Van  Syckel,  J.,  said, 
"  is  not  a  public  purpose,  it  is  difficult  to  conceive  of  any  enterprise 
entrusted  to  a  private  corporation  that  could  be  classed  undei'  that 
head."     (Olmstead  v.  Morris  Aqueduct,  supra.) 

As  the  defendant  could  not  carry  on  the  business  of  supplying 
water  without  the  franchise,  the  city  must  have  intended,  in  grant- 
ing such  franchise,  to  charge  it  with  the  performance  of  the  duty  it 
undertook  for  the  public  by  the  terms  of  its  incorporation,  and  the 
defendant,  in  accepting  the  benefits  of  the  grant,  must  have  as- 
sumed the  performance  of  such  duty.  In  a  word,  the  acceptance 
of  a  franchise,  under  such  conditions,  carries  with  it  the  correspond- 
ing duty  of  supplying  the  public  without  discrimination  with  the 
particular  commodity  which  the  corporation  was  organized  to  sup- 
ply. "  It  may  be  laid  down  as  a  general  rule,"  says  Mr.  Morawetz, 
"  that  whenever  the  aid  of  the  government  is  granted  to  a  private 
company,  in  the  form  of  a  monopoly,  or  a  donation  of  public  prop- 
erty or  funds,  or  a  delegation  of  the  power  of  eminent  domain,  the 
grant  is  subject  to  an  implied  condition  that  the  company  shall  as- 
sume an  obligation  to  fulfill  the  public  purpose  on  account  of 
which  the  grant  was  made.  .  .  .  The  same  rule  applies  to  com- 
panies invested  with  special  privileges  at  the  expense  of  the  public 
for  the  purpose  of  supplying  cities  with  water."  (3  Morawetz  on 
Corp.  §  1129.)  ' 

The  books  are  replete  with  illustrations  of  this  principle  as  ap- 
plied to  water  companies,  gas  companies,  telephone  companies,  and 
others  in  the  performance  of  public  duties.^ 

2  See  also  Griffin  v.  Goldsboro  Water  Co.  (1898),  122  N.  C.  206;  McCrary 


Butte  Water  Co.  (1800),  18  Mont.  199. 


30  BASES   OF   PUBLIC    SERVICE  DUTIES.  [CHAP.    I. 

MINNESOTA  CANAL  &  POWEE  CO.  v.   PRATT. 

101  Min.  197.     1907.^ 

Elliot,  J.  In  this  proceeding  the  Minnesota  Canal  &  Power 
Company  seeks  to  condemn  certain  lands  necessary  for  the  con- 
struction of  works  designed  and  intended  for  the  generation  of 
electric  power  for  distribution  to  the  public  for  the  purposes  of 
light,  heat,  and  power.  The  respondents  moved  to  dismiss  the  peti- 
tion on  the  ground  that  it  did  not  state  facts  sufficient  to  constitute 
a  cause  of  action.  The  motions  were  treated  as  in  the  nature  of 
demurrers,  and  for  the  purposes  of  the  hearing  the  allegations  of 
the  petition  must  be  treated  as  true.  The  trial  court  granted  the 
motions  to  dismiss,  and  the  petitioner  appealed  from  a  judgment 
entered  on  the  order  of  dismissal. 

According  to  this  petition  the  work  of  internal  improvement 
which  the  petitioner  now  proposes  to  undertake  involves  the  con- 
struction and  maintenance  of  a  continuous  navigable  watercourse 
from  and  within  the  territory  hereinafter  described  and  designated 
as  the  Birch  lake  drainage  basin,  in  St.  Louis  and  Lake  counties, 
Minnesota,  to  a  point  ...  in  West  Duluth,  which  shall  include 

Irrigation  cases:  Price  v.  Riverside  L.  &  I.  Co.  (1880),  56  Cal.  431; 
Sammons  v.  Kearney  P.  &  I.  Co.   (1906),  77  Neb.  580. 

"  The  appellee  is  a  corporation  authorized  by  the  legislature  to  exercise 
the  right  of  eminent  domain  (Acts  1889,  p.  22)  and  licensed  by  the  city  of 
Indianapolis  to  lay  pipes  through  its  streets  and  alleys  for  the  transporta- 
tion and  distribution  of  natural  gas  to  its  customers.  Ihese  rights,  whicn 
involve  an  element  of  sovereignty,  and  which  can  exist  only  by  grant  trom 
the  public,  are  rooted  in  the  principle  that  their  exercise  will  bestow  a 
benefit  upon  that  part  of  the  public,  in  whose  behalf  the  grant  is  made,  and 
the  benetit  reserved  by  the  citizens  is  the  adequate  consideration  for  the  right 
and  convenience  surrendered  by  them.  The  grant  thus  resting  upon  a 
public  and  reciprocal  relation,  imposes  upon  the  appellee  the  legal  obligation 
to  serve  all  members  of  the  public  contributing  to  its  asserted  nght.^impar- 
tially.  .  .  ."  State  ex  rel.  Wood  v.  Consumers'  Gas  Co.  (1901),  lo7  Ina. 
i;45,  351. 

Other  instructive  cases  on  this  subject  of  the  duty  of  gas  companies  aris- 
ing out  of  their  exercise  of  the  power  of  eminent  domain,  or  the  power  to 
use  streets  and  highwavs.  are  tiie  following:  Williams  r.  JNIutual  Gas  Co. 
(18&4),  .52  Mich.  499:  I'orlland  Nat.  (Jas  &  Oik  Co.  v.  State  (1893).  L5;i 
Ind.  .54;  Coy  v.  Indianapolis  Gas  Co.  (1897),  146  Ind.  ^55;^  Pub]}^ 
Service  Corporation  v.  American  Lighting  Co.  (1904),  67  N.  J.  lOq.  122; 
Owensboro  Gaslight  Co.  v.  Ilihlel.nind  (Ky..  1S9T».  42  S.  W.  351;  Nairin  t;. 
Kentucky  Heating  Co.  (Kv..  1900).  86  S.  W.  676;  Charleston  Natural  Gas 
Co.  1'    iJowe   (1!K)1),  .52  W.  Va.  662,  671. 

Electric  light  cases:  .Tones  v.  North  (Georgia  El.  Co.  (190(>),  125  (»a. 
018;  Cincinnati  II.  &  D.  K.  II.  Co.  v.  Village  of  Bowling  Green  (1879),  5< 
Oh.  St.  366. 

1  The  statement  of  facts,  arguments  of  counsel,  and  parts  of  the  opinion 
of  Elliot.  .1..  are  omitted,  as  well  as  all  of  the  dissenting  opinion  of  Lkwls. 
J.,  concurred  in  by  Start,  C.  J.  The  dissent  of  Start,  C,  J.,  and  Lewis,  J., 
does  not  involve  the  points  discussed  in  that  part  of  the  majority  opinion 
here  reprinted. —  Ed. 


SEC.    II.]  EXEECISE   OF   FRANCHISES.  21 

the  construction  and  maintenance  of  a  navigable  canal  connecting 
said  Birch  lake  drainage  basin  with  the  Embarrass  river,  thence 
along  said  Embarrass  river  to  a  point  in  the  northerly  end  of  Sabin 
lake,  .  .  .  and  the  improvement  of  the  Embarrass  river  and  the 
lakes  along  the  course  thereof,  and  the  St.  Louis  river  below  the 
outlet  of  the  Embarrass  river,  down  to  [a  designated  point]  in  St. 
Louis  county,  Minnesota,  the  construction  and  maintenance  of  a 
navigable  canal  from  said  last-mentioned  point  on  the  St.  Louis 
river  easterly  to  said  point  in  the  city  of  Duluth,  .  .  .  and  the 
construction  and  maintenance  in  connection  therewith  of  a  suitable 
device  or  chute  for  delivering  logs,  lumber,  timber,  forest  and  other 
products  from  the  east  end  of  said  canal  at  the  point  last  described 
to  and  into  the  said  bay  of  St.  Louis,  which  canal  shall  be  of  such 
size,  dimensions,  and  capacity  as  to  allow  the  floating  of  canal 
boats  and  barges  and  other  water  craft  thereon  for  the  transporta- 
tion of  merchandise,  and  to  allow  the  floating  of  logs,  lumber, 
"timber  and  forest  products  thereon,  which  watercourse  shall  be 
capable  of  delivering  the  logs,  lumber,  timber,  forest,  and  other 
products  from  said  Birch  lake  drainage  basin  and  from  said  St. 
Louis  river  and  its  tributaries  to  and  into  the  bay  of  St.  Louis  at 
the  said  city  of  Duluth  and  the  water  tributary  to  the  St.  Louis 
river  canal  hereinafter  described. 

This  work  involves  and  will  require  the  diversion  into  said 
watercourse  of  such  portions  of  the  waters  of  the  said  Birch  lake 
drainage  basin  as  may  be  required  to  carry  out  the  purposes  of  this 
corporation,  and  the  diversion  of  which  will  not  interfere  with  the 
navigation,  navigable  capacity,  or  public  use  of  the  waters  of  the 
said  Birch  lake  drainage  basin  and  the  various  lakes  and  streams  to 
which  they  are  tributary  and  the  diversion  into  said  St.  Louis 
river  canal  of  the  waters  tributary  thereto. 

The  object  and  purpose  of  the  enterprise  is  described  as  tbe  fur- 
nishing and  distribution,  by  means  of  such  watercourse  and  said 
work,  of  water  to  municipalities,  persons,  and  corporations  for 
public  use;  the  generation  of  electricity  by  means  of  the  water 
power  hereinafter  described,  and  the  supplying  of  such  electricity 
for  public  use  to  all  municipalities,  persons,  and  corporations  desir- 
ing the  same  for  light,  heat,  and  power  purposes,  which  water 
power  shall  be  created  by  conducting  in  pipes  and  conduits  tbe  waters 
so  diverted  from  the  east  end  of  said  St.  Louis  river  canal  to  tbe 
power  plant  of  your  petitioner,  which  will  be  located  at  or  near 
the  level  of  the  bay  of  St.  Louis,  at  said  city  of  Duluth,  under  a 
head  of  six  hundred  feet  or  thereabouts. 

1.  The  petitioner  is  met  at  the  threshold  with  the  assertion  that 
it  is  not  a  public  service  corporation,  and  cannot,  therefore,  under 


22  BASES   OF    PUBLIC    SERVICE  DUTIES.  [CHAP.    I. 

any  circumstances  at  present  exercise  the  power  of  eminent  domain. 
This  contention  seems  to  be  the  result  of  an  inversion  of  ideas. 
It  would  be  more  nearly  correct  to  say  that  the  appellant  is  a  public 
service  corporation,  because  it  has  been  granted  the  power  of  emi- 
nent domain  in  aid  of  the  purposes  for  which  it  was  incorporated. 
The  power  of  eminent  domain  is  not  given  to  public  service  cor- 
porations eo  nomine.  Certain  corporations  organized  to  serve  the 
public  are  given  the  right  to  exercise  this  sovereign  power  as  the 
agent  of  the  state.  What  have  become  known  as  "  public  service 
corporations  "  are  organized  and  exist  under  the  authority  of  the 
state  to  serve  the  public,  by  supplying  the  people  on  equal  terms 
and  for  a  reasonable  compensation  with  services  or  commodities  and 
articles  which,  because  of  their  nature,  location,  or  manner  of 
production  and  distribution,  can  be  best  produced  and  distributed 
]3y  some  organized  form  of  enterprise  operating  under  state  con- 
trol. 

The  statutes  do  not  define  public  service  corporations,  although 
the  Eevised  Laws  of  1905  carry  the  name  as  the  heading  of  section 
2841,  which  authorizes  the  organization  of  corporations  for  the 
specific  purposes  therein  enumerated.  The  power  of  eminent 
domain  is  specifically  granted  to  the  corporations  which  may  be 
organized  under  this  section  of  the  statute,  and  in  that  statute  the 
state  reserves  a  power  of  control  which  it  would  unquestionably 
have  by  the  common  law,  because  of  the  nature  of  the  business  in 
which  such  corporations  are  authorized  to  engage.  Tliat  business 
is  such  that  the  property  of  all  corporations  organized  thereunder 
becomes  affected  with  a  public  use,  and  is  therefore  subject  to 
public  regulation  and  control.  The  corporations  which  may  be 
authorized  under  section  2841,  E.  L.  1905,  are  such  as  fall  within 
the  ordinary  conception  of  a  public  service  corporation.  The  "  busi- 
ness "  of  such  a  corporation  is  determined  by  its  charter  statement 
of  purposes,  which  must  be  within  the  scope  and  limits  of  the 
statutory  authorization.  Every  such  corporation  is  by  the  same 
statute  (R.  L.  1905,  §  2842)  expressly  authorized  to  condemn 
"such  private  property  as  may  be  necessary  or  convenient  for  the 
transaction  of  the  public  business  for  which  it  was  formed."  This 
"  public  business  "  includes  the  construction  of  works  for  supply- 
ing the  public,  by  whatever  means,  with  water,  light,  heat,  and 
power.  In  this  connection  the  state  expressly  reserves  the  right 
at  all  times  "  to  supervise  and  regulate  the  business  methods  and 
management  of  any  such  corporation  and  from  time  to  time  to  fix 
the  compensation  which  it  may  charge  or  receive  for  its  services." 
In  addition  thereto  it  is  provided  that  "  every  such  corporation  ob- 
taining a  franchise  from  a  city  or  village  shall  be  subject  to  such 


SEC.    II.]  EXERCISE   OF   FRANCHISES.  23 

restrictions  and  conditions  as  from  time  to  time  may  be  imposed 
upon  it  by  such  municipality." 

The  appellant  was  organized  under  these  statutes,  and  the  nature 
of  its  business,  as  stated  in  its  articles  of  incorporation,  is  "  to  gen- 
erate electricity  in  the  state  of  Minnesota  by  steam  or  water  power 
for  public  use,  and  to  distribute  and  supply  such  electricity  to  the 
public  for  light,  heat  and  power  purposes."  The  generation  of 
electrical  power  for  distribution  and  sale  to  the  general  public  on 
equal  terms  is  a  public  enterprise,  and  property  used  for  such  pur- 
pose is  devoted  to  a  public  use.  Minnesota  Canal  &  Power  Co.  v. 
Koochiching  Co.,  97  Minn.  429,  107  N.  W.  405.  The  articles  re- 
cite that  this  is  to  be  done  for  the  public  on  equal  terms  and  for  a 
reasonable  compensation,  subject,  as  required  by  the  statute,  to  the 
supervision  and  control  of  the  state  of  Minnesota.  The  petition 
in  this  proceeding  alleges  that  for  the  purpose  of  accomplishing  the 
purpose  for  which  the  corporation  was  organized  it  has  undertaken 
the  work  of  internal  improvement  therein  described  in  detail,  and 
that  "  all  of  said  works  are  to  be  constructed  and  maintained  for 
public  use  on  equal  terms  by  all  municipalities,  persons  and  corpora- 
tions for  a  reasonable  compensation  subject  to  the  state  of  Minne- 
sota." 

The  incorporation  of  the  appellant  is  for  a  specific  purpose,  and 
the  law  of  its  corporate  being  requires  it  to  exercise  its  powers  sub- 
ject to  the  supervision  and  control  of  the  state.  It  must  serve  the 
public  on  equal  terms  and  for  a  reasonable  compensation.  By  ac- 
cepting the  franchise  it  has  consented  to  exercise  its  powers,  subject 
to  this  supervision  and  control,  in  the  interest  of  the  public. 
Stewart  v.  Great  Northern  Ey.  Co.,  65  Minn.  515,  68  K.  W.  208, 
33  L.  E.  A.  427;  Charleston  v.  Lowe,  52  W.  Va.,  662,  671,  44  S.  E. 
410;  Olmstead  v.  Proprietors,  47  N.  J.  L.  311;  Haugen  v.  Albina, 
21  Ore.  411,  28  Pac.  244,  14  L.  E.  A.  424;  Cincinnati  v.  Village, 
57  Oh.  St.  336,  345,  49  N.  E.  121,  41  L.  E.  A.  422 ;  American  v. 
State,  46  Neb.  194,  64  N.  W.  711,  30  L.  E.  A.  447,  50  Am.  St.  610; 
Crumley  v.  Watauga,  99  Tenn.  420,  41  S.  W.  1058 ;  Griffin  v.  Golds- 
boro,  122  N.  C.  206,  30  S.  E.  319,  41  L.  E.  A.  240 ;  Eockingham 
Co.  V.  Hobbs,  72  N.  H.  531,  58  Atl.  46,  66  L.  E.  A.  581.  In  grant- 
ing this  charter  the  state  reserved  the  right  to  regulate  the  business 
of  the  corporation.  By  accepting  the  franchise  the  corporation  en- 
gaged to  use  it  in  such  a  manner  as  will  accomplish  the  objects  for 
which  the  legislature  granted  the  charter. 


24  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.   I. 

ALLNUTT  V.  INGLIS 
12  East,  527.     1810.^ 

The  plaintiffs'  declaration  stated  in  part  that  they  imported  into 
the  port  of  London  40  pipes  of  wine,  being  goods  which  might  by 
the  statute  be  secured  in  defendant's  warehouse  without  the  duties 
due  being  first  paid,  and  did  all  things  necessary  to  legalize  the 
lodging  of  said  goods  in  defendant's  warehouse,  and  demanded  that 
the  defendant  receive  them  for  reasonable  hire  and  reioard,  and 
tendered  the  goods  to  the  defendant,  and  were  at  all  times  ready 
and  willing  to  pay  such  reasonable  hire  and  reward,  but  that  de- 
fendant refused  to  receive  such  goods  into  said  warehouse,  though 
there  was  sufficient  vacant  room  for  such  goods,  whereby  the  plain- 
tiffs were  injured  by  being  required  to  advance  the  duties  on  such 
goods  to  the  amount  of  £500. 

The  plea  of  the  defendant  was  to  the  effect  that  a  table  of 
charges  for  warehousing  had  been  published,  and  that  the  plain- 
tiffs refused  to  pay  the  amount  set  forth  in  such  table,  which  was 
the  reason  for  the  refusal  to  accept  the  plaintiffs'  goods.  To  this 
plea  there  was  a  general  demurrer. 

Richardson  for  the  plaintiff.  The  reasonableness  of  the  hire 
and  reward  offered  by  the  plaintiffs  to  the  company  for  the  privilege 
of  warehousing  their  goods  in  its  warehouses,  without  the  imme- 
diate payment  of  the  import  duties,  is  admitted :  and  the  question 
is  whether  the  company  were  bound  to  receive  the  goods  upon  those 
terms.  It  is  a  general  rule  of  law,  that  where  a  person  has  monopoly 
granted  to  him  for  public  purposes,  he  is  bound  to  render  the 
service  or  use  of  the  thing  to  which  his  privilege  is  annexed  for  a 
reasonable  compensation.  .  .  .  Then  under  the  warehousing  act, 
the  intent  of  the  legislature  was  not  merely  to  confer  a  benefit 
upon  the  London  dock  company,  but  to  make  them  the  instruments 
of  a  public  benefit  to  the  trade  of  London :  and  the  company  having 
accepted  the  monopoly  cum  onere,  and  knowing  such  to  have  been 
the  intent  of  the  legislature,  they  cannot  now  convert  it  into  an 
engine  to  extort  unreasonable  rates.  ...  If  then  the  company  did 
not  mean  to  dedicate  their  warehouses  to  the  public  use  in  this 
manner,  they  ought  to  liave  made  their  stand  in  the  first  instance, 
and  should  have  declined  taking  tlie  certificate  of  the  lords  of  the 
treasury,  conferring  the  exclusive  privilege,  wliicli  issued  with  their 
own  consent.     And  if  this  were  otherwise,  and  the  company  could 

1  Only  the  substance  of  the  pleadings  is  here  given,  and  parts  of  the  argu- 
ments of  counsel  are  omitted. —  Ed. 


SEC,   II.]  EXERCISE   OF  FRANCHISES.  25 

refuse  to  receive  the  goods  of  the  merchants  except  upon  their  own 
terms,  the  act  would  be  for  the  benefit  of  the  company,  and  not  of 
trade  in  general,  which  it  would  rather  encumber. 

Bosanquet,  contra.  Every  person  is  entitled  to  make  the  best 
use  of  his  own  property,  and  the  only  exception  to  the  rule  is  in 
cases  where  the  owner  has  so  entirely  dedicated  the  use  of  it  to  the 
public,  that  he  cannot  resume  the  exclusive  possession  of  it  again; 
as  in  the  instance  of  a  highway,  or  ferry.  So  if  one  accept  a 
grant  from  the  crown  of  land  on  the  sea  shore  or  on  the  bank  of  a 
navigable  river,  in  a  public  port,  for  the  purpose  of  erecting  a 
public  wharf  or  quay,  he  cannot  disuse  it,  but  is  bound  to  preserve 
it  for  its  destined  purpose.  If  a  man  open  a  public  house,  he 
cannot  refuse  to  entertain  travellers ;  if  he  set  up  as  a  public  carrier 
he  cannot  refuse  to  carry :  but  he  may  limit  his  engagement  with 
the  public,  and  then  he  is  not  bound  to  admit  travellers  in  the 
one  case,  or  to  carry  goods  in  the  other,  upon  any  other  terms 
than  those  upon  which  he  engaged.  [Ld.  Ellenborougli,  C.  J.  It 
must  be  recollected  that  in  those  cases  there  is  a  power  in  the 
public  of  increasing  the  number  of  public  houses  or  of  carriers  in- 
definitely.] The  London  Assurance  Company,  it  is  well  known, 
contract  at  a  premium  rather  higher  than  the  ordinary  rate  of  in- 
surance. If  this  company  had  built  counting  houses  instead  of 
warehouses,  might  they  not  have  let  them  for  as  much  as  they 
could  get?  [L,ov{)i  Ellenborougli,  C.  3.  The  business  of  insurance 
and  of  counting  houses  may  be  carried  on  elsewhere,  and  therefore 
such  instances  do  not  apply.  The  only  question  arises  on  the  bond- 
ing act:  shew  us  that  wines  may  be  bonded  elsewhere.]  There 
are  in  fact  now  other  warehouses  licensed  for  bonding  wines  be- 
sides those  within  the  docks.  [Lord  Ellenborougli,  C.  J.  asked 
whether  the  London  dock  company  were  not  themselves  the  occu- 
piers of  those  other  warehouses  ?]  And  it  was  admitted  that  they 
were :  but  it  was  insisted  that  as  the  crown  is  not  restrained  from 
licensing  other  warehouses,  it  cannot  be  considered  as  a  monopoly 
in  the  company,  so  as  to  make  the  rule  of  law  attach  upon  them. 
[Lord  Ellenborougli,  C.  J.  If  the  privilege  should  be  extended  to 
other  warehouses,  it  will  only  be  a  more  extended  monopoly  in  the 
company  and  in  the  owners  of  the  other  privileged  places.] 

Richardson  in  reply  was  desired  by  the  Court  to  consider  how 
far  the  company  was  pledged  to  continue  to  apply  its  warehouses 
to  this  purpose;  and  also  how  far  the  crown  was  restrained  from 
licensing  other  warehouses  in  other  hands  in  the  port  of  London 
for  the  same  purpose.  He  denied  that  the  company,  having  ac- 
cepted of  this  privilege  to  their  warehouses  for  the  benefit  of  the 
public  as  well  as  of  themselves,  could  throw  them  up  at  their  own 


26  BASES  OF   PUBLIC   SERVICE  DUTIES.  [CHAP.   I. 

pleasure,  without  reasonable  notice  to  the  crown;  for  if  so,  the 
public  might  be  deserted  just  at  the  moment  of  need,  and  after  the 
merchants  have  committed  themselves  and  incurred  expence  and 
risk  upon  the  faith  of  the  engagement  between  the  crown  and  the 
company.  It  must  be  understood  that  when  the  company  accepted 
the  certificate  conferring  the  exclusive  privilege,  they  took  it  with 
all  its  burthens,  and  cannot  withdraw  from  itj)  and  while  their 
term  is  running,  the  legislature  declares  that  it  shall  be  lawful  for 
the  importers,  &c.  of  goods  to  warehouse  them  in  the  company's 
warehouses,  without  payment  of  the  duties  at  the  time,  provided 
they  are  certified  by  the  treasury;  which  has  been  done.  But  at 
any  rate,  supposing  the  company  could  withdraw  their  warehouses 
from  this  use,  with  or  without  notice,  it  is  sufficient  in  this  case 
that  they  have  not  done  so;  and  while  they  in  fact  enjoy  the 
monopoly,  they  must  take  it  cum  onere.  Then  supposing  other  out- 
lying warehouses  have  been  licensed,  the  argument  is  not  varied 
against  the  company  under  whose  control  they  are.  And  supposing 
others  were  also  licensed,  that  would  not  destroy  but  only  extend 
the  monopoly. 

Lord  Ellenborough,  C.  J.  \The  question  on  this  record  is 
whether  the  London  Dock  Company  have  a  right  to  insist  upon  re- 
ceiving wines  into  their  warehouses  for  a  hire  and  reward  arbitrary 
and  at  their  will  and  pleasure,  or  whether  they  were  bound  to  re- 
ceive them  there  for  a  reasonable  reward  only.  There  is  no  doubt 
that  the  general  principle  is  favored  both  in  law  and  justice,  that 
every  man  may  fix  what  price  he  pleases  upon  his  own  property  or 
the  use  of  it :  but  if,  for  a  particular  purpose,  the  public  have  a 
right  to  resort  to  his  premises  and  make  use  of  them,  and  he  have  a 
monopoly  in  them  for  that  purpose,  if  he  will  take  the  benefit  of 
that  monopoly,  he  must  as  an  equivalent  perform  the  duty  attached 
to  it  on  reasonable  terms.  The  question  then  is,  whether  circum- 
stanced as  this  company  is  by  the  combination  of  the  warehousing 
act  with  the  act  by  which  they  were  originally  constituted,  and 
with  the  actually  existing  state  of  things  in  the  port  of  London, 
whereby  they  alone  have  the  warehousing  of  these  wines,  they 
be  not,  according  to  the  doctrine  of  Lord  Hale,  obliged  to  limit 
themselves  to  a  reasonable  compensation  for  such  warehousing? 
And  according  to  him,  wherever  the  accident  of  time  casts  upon  a 
party  the  benefit  of  having  a  legal  monopoly  of  landing  goods  in 
a  public  port,  as  where  he  is  the  owner  of  the  only  wharf  authorized 
to  receive  goods  which  happens  to  be  built  in  a  port  newly  erected, 
he  is  confined  to  take  reasonable  compensation  only  for  the  use  of 
the  wharf.  Lord  Hale  puts  the  case  either  way;  where  the  king 
or  a  subject  have  a  public  wharf  to  whicii  all  persons  must  come 


SEC.    II.]  EXEECISE   OF   FRANCHISES.  27 

who  come  to  that  port  to  unlade  their  goods,  either  "  because  they 
"are  the  wharfs  only  licensed  b}^  the  queen,  or  because  there  is 
"no  other  wharf  in  that  port,  as  it  may  fall  out:  in  that  case,  (he 
"  says)  there  cannot  be  taken  arbitrary  and  excessive  duties  for 
"  cranage,  wharfage,  &c. :  neither  can  they  be  enhanced  to  an  immo- 
*' derate  rate;  but  the  duties  must  be  reasonable  and  moderate, 
"  though  settled  by  the  king's  license  or  charter."  x\nd  then  he  as- 
signs this  reason,  "  for  now  the  wharf  and  crane  and  other  con- 
"  veniences  are  affected  with  a  public  interest,  and  they  cease  to  be 
"  juris  privati  only."  Then  were  the  company's  warehouses  juris 
privati  only  at  this  time  ?  The  legislature  had  said  that  these  goods 
should  only  be  warehoused  there;  and  the  act  was  passed  not 
merely  for  the  benefit  of  the  company  but  for  the  good  of  trade. 
The  first  clause  ^  says  that  it  would  greatly  tend  to  the  encourage- 
ment of  the  trade  and  commerce  of  G.  B.,  and  to  the  accommoda- 
tion of  merchants  and  others  if  certain  goods  were  permitted  to  be 
entered  and  landed  and  secured  in  the  port  of  London  without  pay- 
ment of  duties  at  the  time  of  the  first  entry :  and  then  it  says  that 
it  shall  he  lawful  for  the  importer  of  certain  goods  enumerated  in 
table  A.  to  secure  the  same  in  the  West  India  dock  warehouses :  and 
then  by  s.  2.  other  goods  enumerated  in  table  B.  may  in  like  man- 
ner be  secured  in  the  London  dock  warehouses.  And  there  are  no 
other  places  at  present  lawfully  authorized  for  the  warehousing  of 
wines  (such  as  were  imported  in  this  case)  except  these  warehouses 
within  the  London  dock  premises,  or  such  others  as  are  in  the  hands 
of  this  company.  But  if  those  other  warehouses  were  licensed  in 
other  hands,  it  would  not  cease  to  be  a  monopoly  of  the  privilege 
of  bonding  there,  if  the  right  of  the  public  were  still  narrowed  and 
restricted  to  bond  their  goods  in  those  particular  warehouses,  though 
they  might  be  in  the  hands  of  one  or  two  others  besides  the  com- 
pany's. '■.  Here  then  the  company's  warehouses  were  invested  with 
the  monopoly  of  a  public  privilege,  and  therefore  they  must  by  law 
confine  themselves  to  take  reasonable  rates  for  the  use  of  them  for 
that  purpose.)  If  the  crown  should  hereafter  think  it  adviseable  to 
extend  the  privilege  more  generally  to  other  persons  and  places,  so 
far  as  that  the  public  will  not  be  restrained  from  exercising  a  choice 
of  warehouses  for  the  purpose,  the  company  may  be  enfranchised 
from  the  restriction  which  attaxihes  upon  a  monopoly :  but  at  present 
while  the  public  are  so  restricted  to  warehouse  their  goods  with 
them  for  the  purpose  of  bonding,  they  must  submit  to  that  re- 
striction: and  it  is  enough  that  there  exists  in  the  place  and  for 
the  commodity  in  question  a  virtual  monopoly  of  the  warehousing 
for  this  purpose,  on  which  the  principle  of  law  attaches,  as  laid 

2  43  G.  3,  c.  132,  the  general  warehousing  act. 


28  BASES    OF    PUBLIC    SERVICE   DUTIES.  [CHAP,    I. 

down  by  Lord  Hale  in  the  passage  referred  to,  which  includes  the 
good  sense  as  well  as  the  law  of  the  subject.  (Whether  the  company 
be  bouncl  to  continue  to  apply  their  warehouses  to  this  purpose  may 
be  a  nice  question,  and  I  will  not  say  to  what  extent  it  may  go ;  but 
as  long  as  their  warehouses  are  the  only  places  which  can  be  re- 
sorted to  for  this  purpose,  they  are  bound  to  let  the  trade  have 
the  use  of  them  for  a  reasonable  hire  and  reward.) 

Grose,  J.  The  company  contend  that  they  rhay  take  what  ware- 
house rent  they  please :  but  if  they  have  a  monopoly  of  the  ware- 
housing for  this  purpose,  we  cannot  say  that  the  legislature  in- 
tended that  they  should  take  any  price  they  chose  to  impose  upon 
the  importer;  for  if  they  could,  it  would  violate  the  general  in- 
tention of  the  act  which  was  to  promote  and  assist  trade,  and  not 
to  prejudice  it,  which  the  company  would  be  enabled  to  do  if  they 
could  enhance  their  demand  for  warehouse  rent  to  any  extent  they 
pleased.  And  if  we  attend  to  the  principle  of  law  by  which  monop- 
olies are  regulated,  and  apply  to  this  case  what  is  laid  down  by 
Lord  Bale  upon  that  subject,  it  is  impossible  to  say  that  this  com- 
pany do  not  come  within  that  principle. 

Le  Blanc  J.  We  can  only  look  to  the  situation  of  the  parties  as 
they  appear  upon  this  record,  and  with  reference  to  the  acts  of 
parliament.  The  company  are  proprietors  of  warehouses  in  the 
port  of  London,  which  they  were  not  under  any  obligation  to  erect 
by  the  original  act  constituting  them  a  company :  they  stood  there- 
fore before  the  passing  of  the  general  warehousing  act  in  the  same 
situation  as  other  proprietors  of  warehouses.  Then  the  warehous- 
ing act  was  passed,  which  is  expressed  to  be  for  the  encouragement 
of  trade  and  the  accommodation  of  the  merchants  and  others:  and 
by  the  2d  section  it  is  made  lawful  for  the  importer  to  secure  these 
goods  in  the  London  dock  warehouses  without  paying  the  duties 
upon  entry ;  and  it  does  not  appear  at  present  that  that  privilege  is 
extended  either  by  act  of  parliament  or  by  any  other  competent 
authority  to  any  other  than  the  warehouses  belonging  to  the  com- 
pany. Then  admitting  these  warehouses  to  be  private  property, 
and  that  tlie  company  might  discontinue  this  application  of  them, 
or  that  they  might  have  made  what  terms  they  pleased  in  the  first 
instance ;  yet  having,  as  they  now  have,  this  monopoly,  the  question 
is  whether  the  warehouses  be  not  private  property  clothed  with  a 
public  right;  and  if  so,  the  principle  of  law  attaches  upon  them. 
The  privileges  then  of  bonding  these  wines  being  at  present  confined 
by  the  act  of  parliament  to  the  company's  warehouses,  is  it  not  the 
privilege  of  the  public,  and  shall  not  that  which  is  for  the  good 
of  the  public  attach  on  the  monopoly,  that  they  shall  not  be  bound 
to  pay  an  arbitrary  but  only  a  reasonable  rent  ?     But  upon  this 


SEC.    II.]  EXERCISE   OF   FRANCHISES.  29 

record  the  company  resist  having  their  demand  for  warehouse  rent 
confined  within  any  limit ;  and  though  it  does  not  follow  that  the 
rent  in  fact  fixed  by  them  is  unreasonable,  they  do  not  chuse  to 
insist  on  its  being  reasonable,  for  the  purpose  of  raising  the  ques- 
tion. For  this  purpose  therefore  the  question  may  be  taken  to  be, 
whether  they  may  claim  an  unreasonable  rent?  But  though  this 
be  private  property,  yet  the  principle  laid  down  by  Lord  Hale  at- 
taches upon  it,  that  where  private  property  is  affected  with  a  public 
interest,  it  ceases  to  be  juris  privati  only;  and  in  case  of  its  dedica- 
tion to  such  a  purpose  as  this,  the  owners  cannot  take  arbitrary  and 
excessive  duties,  but  the  duties  must  be  reasonable.  That  prin- 
ciple was  followed  up  in  the  case  of  Bolt  v.  Stennett :  for  there  the 
quay  being  one  of  the  public  quays  licensed  under  the  statute  of 
Elizabeth,  it  was  held  that  the  owner  was  bound  to  permit  the  use 
of  the  crane  upon  it,  and  could  not  insist  either  that  the  public 
should  not  use  the  crane  at  all,  or  should  use  it  only  upon  his  own 
terms,  but  that  he  was  bound  to  permit  the  use  of  it  upon  reason- 
able terms.  Whether  the  company  be  bound  to  continue  the  use  of 
their  warehouses  for  this  purpose  may  hereafter  be  material  to  be 
decided,  but  no  question  arises  upon  that  at  present :  the  warehouses 
are  still  applied  to  the  purpose,  and  there  was  room  sufficient  to 
have  received  these  goods  at  the  time;  and  the  only  question  was 
whether  they  were  bound  to  receive  them  for  a  reasonable  rent :  this 
they  refused  to  do,  and  in  that  refusal  they  were  wrong. 

Bayley  J.  The  question  is  whether  the  company  have  a  right  to 
impose  their  own  terms,  whether  reasonable  or  not,  upon  the  im- 
porters of  these  goods  who  offered  to  deposit  them  in  their  ware- 
houses upon  the  terms  of  the  warehousing  act?  For  if  so,  they 
might  exclude  particular  individuals  from  the  benefit  of  the  act. 
Or  the  question  may  be  stated  to  be  whether  the  public  have  not 
a  right  under  that  act  to  deposit  and  secure  certain  goods  in  the 
company's  warehouses  upon  reasonable  terms,  and  whether  the  com- 
pany be  not  bound  to  receive  such  goods  from  all  the  public  ?  Now 
the  act  is  declared  to  be  passed  for  the  benefit  of  the  trade  in  gen- 
eral and  for  the  accommodation  of  the  merchants :  and  it  proceeds 
afterwards  to  say  that  it  shall  be  lawful  for  the  importers,  &c. 
(meaning  all  importers,  and  not  particular  individuals  of  them)  to 
secure  their  goods  of  a  certain  description  in  the  company's  ware- 
houses. But  according  to  the  argument  now  urged  for  the  com- 
pany, the  act  was  not  passed  for  the  benefit  of  all  importers,  but  of 
such  only  as  chuse  to  pay  the  company  what  they  are  pleased  to  de- 
mand for  warehouse  rent;  for  to  this  length  the  argument  neces- 
sarily goes.  It  is  said  however  that  the  company  have  not  a  monop- 
oly of  this  privilege;  but  I  am  not  aware  of  any  act  of  parliament 


30  BASES   OP  PUBLIC    SERVICE  DUTIES.  [CHAP.   I, 

which  gave  the  commissioners  of  the  treasury  any  power  to  license 
particular  places  for  the  bonding  of  wines  before  this  act;  though 
I  know  they  had  such  a  power  with  respect  to  sugar  and  coffee. 
But  whether  they  had  it  or  not,  it  is  sufficient  to  say  that  these  were 
the  only  warehouses  where  the  importer  had  a  right  to  insist  that 
his  goods  should  be  warehoused  and  bonded;  for  he  certainly  could 
not  have  obliged  the  commissioners  to  license  any  other  place  for 
that  purpose.  As  to  the  question  whether  the  company  may  re- 
nounce the  application  of  their  warehouses  to  this  use,  I  cannot  add 
to  what  the  Court  have  already  said:  but  at  least  they  cannot  re- 
nounce it  partially;  and  I  think  it  would  be  deluding  the  public  if 
the  company  were  able  to  renounce  at  a  moment's  warning  the  ware- 
housing of  the  goods  for  this  purpose  after  they  had  agreed  to  ac- 
cept the  licence  and  monopoly. 

Judgment  for  the  plaintiff.^ 

3  See  the  interpretation  and  application  of  this  case  in  Attorney-General  v. 
Simpson  [IDOl],  2  Ch.  671,  719,  and  in  Simpson  v.  Attorney-General  [1904], 
A.  C.  47G,  483. 

"  In  this  case  the  charter  conferred  the  pi'ivilege  of  driving,  not  a  part, 
not  such  portion  as  the  company  may  choose,  but  '  all  '  the  logs  to  be  driven. 
This  right  having  been  accepted  by  the  company,  it  became  a  vested  and 
also  an  exclusive  right.  ...  By  its  acceptance  and  exclusion  of  the  owner 
from  the  privilege,  in  justice  and  in  law  it  assumed  an  obligation  cor- 
responding to,  and  commensurate  with  its  privilege.  It  accepted  the  right 
to  drive  all  the  logs,  and  that  acceptance  was  an  undertaking  to  drive  them 
all,  or  to  use  reasonable  skill  and  diligence  to  accomplish  that  object.  This 
duty  is  not  one  imposed  by  the  charter,  certainly  not  by  that  alone,  but  is 
the  result  of  the  defendant's  own  act ;  it  is  its  own  undertaking ;  virtually 
a  contract  on  its  part,  to  accomplish  that  which  it  was  authorized  to  do." 
Weymouth  v.  Penobscot  Log  Driving  Co.   (1880),  71  Me.  29,  39. 

See  also  Gordon  v.  Winchester  (Ky.,  1826),  12  Bush,  110;  New  Orleans 
Gas  Light  Co.  v.  Paulding  (La.,  1845),  12  Rob.  378,  380;  Shepard  v.  Mil- 
waukee Gas  Light  Co.  (1858),  6  Wis.  526,  534;  Patterson  v.  Wollman 
(1896),  5  N.  D.  608,  615. 

AIDING   PRIVATE   ENTERPRISES   THBOUGH   TAXATION. 

"  The  power  of  government  ...  to  affect  the  individual  in  his  private 
rights  of  property,  whether  by  exacting  contributions  to  the  general  means, 
or  by  sequestration  of  specific  property,  is  confined,  I)y  obvious  implication 
as  well  as  by  express  terms,  to  purposes  and  objects  alono  which  the  govern- 
ment was  established  to  promote,  to  wit,  public  uses  and  the  public  service. 
This  power,  when  exercised  in  one  form  is  taxation ;  in  the  other,  is  desig- 
nated as  the  right  of  eminent  domain.  The  two  are  diverse  in  respect  of  the 
occasion  and  mode  of  exercise,  but  identical  in  their  source,  to  wit,  the 
necessities  of  organized  society;  and  in  the  end  by  which  alone  the  exer- 
cise of  either  can  be  justified,  to  wit,  some  public  service  or  use."  Lowell  v. 
Boston    (1873),   111   Mass.  454,  462. 

"  But  railroads  are  always  held  to  be  built  for  public  use,  whether  the 
right  to  take  land,  or  the  right  to  grant  pecuniary  aid  to  them,  is  consid- 
ered. .  .  .  The  building  of  the  subway  for  the  carriage  of  such  passengers 
as  pay  the  regular  fare  is  therefore  for  a  public  use  ;  and  it  is  within  the 
constitutional  power  of  the  Legislature  to  order  or  sanction  taxation  for  it." 
Price  V.  Crocker   (1896),  166  Mass.  347,  361. 


SEC.   III.],  LEGISLATION.  31 

Section  3. 

Legislation. 

MUNN  V.  ILLINOIS 

94  U.  S.  113.     1876.^ 

The  Constitution  of  Illinois,  adopted  in  1870,  contains  the  fol- 
lowing in  reference  to  the  inspection  of  grain,  and  the  storage 
thereof  in  public  warehouses: 

ARTICLE  XIII.— WAREHOUSES. 

"  Section  1.  All  elevators  or  storehouses  where  grain  or  other 
property  is  stored  for  a  compensation,  whether  the  property  stored 
be  kept  separate  or  not,  are  declared  to  be  public  warehouses." 

"  Section  7.  The  general  assembly  shall  pass  laws  for  the  inspec- 
tion of  grain,  for  the  protection  of  producers,  shippers  and  re- 
ceivers of  grain  and  produce." 

An  act  of  the  general  assembly  of  Illinois,  entitled  "  An  Act  to 
regulate  public  warehouses  and  the  warehousing  and  inspection  of 
grain,  and  to  give  effect  to  art.  13  of  the  Constitution  of  this  State,"' 
approved  April  25,  1871,  provides  in  the  second  paragraph  of  sec- 
tion 15,  as  follows : 

"  The  maximum  charge  of  storage  and  handling  of  grain,  in- 
cluding the  cost  of  receiving  and  delivering,  shall  be  for  the  first 
thirty  days  or  part  thereof  two  cents  per  bushel,  and  for  each 
fifteen  days  or  part  thereof,  after  the  first  thirty  days,  one-half  of 
one  cent  per  bushel;  provided,  however,  that  grain  damp  or  liable 
to  early  damage,  as  indicated  by  its  inspection  when  received,  may 
be  subject  to  two  cents  per  bushel  storage  for  the  first  ten  days,  and 
for  each  additional  five  days  or  part  thereof,  not  exceeding  one-half 
of  one  cent  per  bushel." 

Mr.  Chief  Justice  Waite  delivered  the  opinion  of  the  court. 

The  question  to  be  determined  in  this  case  is  whether  the  general 
assembly  of  Illinois  can,  under  the  limitations  upon  the  legislative 
power  of  the  States  imposed  by  the  Constitution  of  the  United 
States,  fix  by  law  the  maximum  of  charges  for  the  storage  of  grain 
in  warehouses  at  Chicago  and  other  places  in  the  State  having  not 
less  than  one  hundred  thousand  inhabitants,  "  in  which  grain  is 
stored  in  bulk,  and  in  which  the  grain  of  different  owners  is  mixed 

1  The  statement  of  facts  has  been  abridged,  parts  of  Mr.  Chief  Justice 
Waite's  opinion  are  omitted,  and  only  one  paragraph  of  Mr.  Justice 
Field's  quite  lengthy  dissenting  opinion  is  reprinted. —  Ed. 


32  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

too-ether,  or  in  which  grain  is  stored  in  such  a  manner  that  the 
identity  of  different  lots  or  parcels  cannot  be  accurately  preserved." 
It  is  claimed  that  such  a  law  is  repugnant  — 

1.  To  that  part  of  sect.  8,  art.  1,  of  the  Constitution  of  the 
United  States  which  confers  upon  Congress  the  power  "  to  regulate 
commerce  with  foreign  nations  and  among  the  several  States ;  " 

2.  To  that  part  of  sect.  9  of  the  same  article  which  provides  that 
"no  preference  shall  be  given  by  any  regulation  of  commerce  or 
revenue  to  the  ports  of  one  State  over  those  of  another ; "  and 

3.  To  that  part  of  amendment  14  which  ordains  that  no  State 
shall  "  deprive  any  person  of  life,  liberty,  or  property,  without  due 
process  of  law,  nor  deny  to  any  person  within  its  jurisdiction  the 
equal  protection  of  the  laws." 

We  will  consider  the  last  of  these  objections  first. 

Every  statute  is  presumed  to  be  constitutional.  The  courts  ought 
not  to  declare  one  to  be  unconstitutional,  unless  it  is  clearly  so.  If 
there  is  doubt,  the  expressed  will  of  the  legislature  should  be  sus- 
tained. 

The  Constitution  contains  no  definition  of  the  word  "  deprive," 
as  used  in  the  Fourteenth  Amendment.  To  determine  its  significa- 
tion, therefore,  it  is  necessary  to  ascertain  the  effect  which  usage 
has  given  it,  when  employed  in  the  same  or  a  like  connection. 

While  this  provision  of  the  amendment  is  new  in  the  Constitution 
of  the  United  States,  as  a  limitation  upon  the  powers  of  the  States, 
it  is  old  as  a  principle  of  civilized  government.  It  is  found  in 
Magna  Charta,  and,  in  substance  if  not  in  form,  in  nearly  or  quite 
all  the  constitutions  that  have  been  from  time  to  time  adopted  by 
the  several  States  of  the  Union.  By  the  Fifth  Amendment,  it 
was  introduced  into  the  Constitution  of  the  United  States  as  a 
limitation  upon  the  powers  of  the  national  government,  and  by  the 
Fourteentli,  as  a  guaranty  against  any  encroachment  upon  an 
acknowledged  right  of  citizenship  by  the  legislatures  of  the 
States. 

When  the  people  of  the  United  Colonies  separated  from  Great 
Britain,  tliey  changed  tlie  form,  but  not  the  substance,  of  their 
government.  Tbey  retained  for  the  purposes  of  government  all 
the  powers  of  the  British  Parliament,  and  through  their  State  con- 
stitutions, or  otber  forms  of  social  compact,  undertook  to  give  prac- 
tical effect  to  such  as  they  deemed  necessary  for  the  common  good 
and  the  security  of  life  and  property.  All  the  powers  which  they 
retained  they  committed  to  tlieir  respective  States,  unless  in  ex- 
press terms  or  by  implication  reserved  to  themselves.  Subsequently, 
when  it  was  found  necessary  to  establish  a  national  government  for 
national  purposes,  a  part  of  the  powers  of  the  States  and  of  th^ 


SEC.    III.]  LEGISLATION.  33 

people  of  the  States  was  granted  to  the  United  States  and  the  people 
of  the  United  States.  This  grant  operated  as  a  further  limitation 
upon  the  powers  of  the  States,  so  that  now  the  governments  of  the 
States  possess  all  the  powers  of  the  Parliament  of  England,  except 
such  as  have  been  delegated  to  the  United  States  or  reserved  by  the 
people.  The  reservations  by  the  people  are  shown  in  the  prohi- 
bitions of  the  constitutions. 

When  one  becomes  a  member  of  society,  he  necessarily  parts 
with  some  rights  or  privileges  which,  as  an  individual  not  aiiected 
by  his  relations  to  others,  he  might  retain.  "  A  body  politic,"  as 
aptly  defined  in  the  preamble  of  the  Constitution  of  Massachusetts, 
"  is  a  social  compact  by  which  the  whole  people  covenants  with  each 
citizen,  and  each  citizen  with  the  whole  people,  that  all  shall  be  gov- 
erned by  certain  laws  for  the  common  good."  This  does  not  con- 
fer power  upon  the  whole  people  to  control  rights  which  are  purely 
■and  exclusively  private,  Thorpe  v.  E.  &  B.  Eailroad  Co.,  27  Vt. 
143 ;  but  it  does  authorize  the  establishment  of  laws  requiring  each 
citizen  to  so  conduct  himself,  and  so  use  his  own  property,  as  not 
unnecessarily  to  injure  another.  This  is  the  very  essence  of  gov- 
ernment, and  has  found  expression  in  the  maxim  sic  utere  tuo  ut 
alienum  non  Icedas.  From  this  source  come  the  police  powers, 
which,  as  was  said  by  Mr.  Chief  Justice  Taney  in  the  License  Cases, 
5  How.  583,  "  are  nothing  more  or  less  than  the  powers  of  govern- 
ment inherent  in  every  sovereignty,  .  .  .  that  is  to  say,  .  .  .  the 
power  to  govern  men  and  things."  Under  these  powers  the  govern- 
ment regulates  the  conduct  of  its  citizens  one  towards  another,  and 
the  manner  in  which  each  shall  use  his  own  property,  when  such 
regulation  becomes  necessary  for  the  public  good.  In  their  exercise 
it  has  been  customary  in  England  from  time  immemorial,  and  in 
this  country  from  its  first  colonization,  to  regulate  ferries,  common 
carriers,  hackmen,  bakers,  millers,  wharfingers,  innkeepers,  &c., 
and  in  so  doing  to  fix  a  maximum  of  charge  to  be  made  for  services 
rendered,  accommodations  furnished,  and  articles  sold.  To  tliis 
day,  statutes  are  to  be  found  in  many  of  the  States  upon  some  or 
all  these  subjects;  and  we  think  it  has  never  yet  been  successfully 
contended  that  such  legislation  came  within  any  of  the  constitutional 
prohibitions  against  interference  with  private  property.  With  the 
Fifth  Amendment  in  force.  Congress,  in  1820,  conferred  power 
upon  the  city  of  Washington  "  to  regulate  .  .  .  the  rates  of  wharf- 
age at  private  wharves,  .  .  .  the  sweeping  of  chimneys,  and  to  fix 
the  rates  of  fees  therefor,  .  .  .  and  the  weight  and  quality  of 
bread,"  3  Stat.  587,  sect.  7;  and,  in  1848,  "to  make  all  necessary 
regulations  respecting  hackney  carriages  and  the  rates  of  fare  of 
the  same,  and  the  rates  of  hauling  by  cartmen,  wagoners,  carmen. 


34  BASES    OF   PUBLIC    SERVICE  DUTIES.  [CHAP.    I. 

and  draymen,  and  the  rates  of  commission  of  auctioners/'  9  id. 
224,  sect.  2. 

From  this  it  is  apparent  that,  down  to  the  time  of  the  adoption 
of  the  Fourteenth  Amendment,  it  was  not  supposed  that  statutes 
regulating  the  use,  or  even  the  price  of  the  use,  of  private  property 
necessarily  deprived  an  owner  of  his  property  without  due  process  of 
law.  Under  some  circumstances  they  may,  but  not  under  all.  The 
amendment  does  not  change  the  law  in  this  particular:  it  simply 
prevents  the  States  from  doing  that  which  will  operate  as  such  a 
deprivation. 

This  brings  us  to  inquire  as  to  the  principles  upon  which  this 
power  of  regulation  rests,  in  order  that  we  may  determine  what 
is  within  and  what  without  its  operative  effect.  Looking,  then,  to 
the  common  law,  from  whence  came  the  right  which  the  Consti- 
tution protects,  we  find  that  when  private  property  is  "  affected  with 
a  public  interest,  it  ceases  to  be  juris  privati  only."  This  was, said 
by  Lord  Chief  Justice  Hale  more  than  two  hundred  years  ago,  in 
his  treatise  De  Portibus  Maris,  1  Harg.  Law  Tracts,  78,  and  has 
been  accepted  without  objection  as  an  essential  element  in  the 
law  of  property  ever  since.  Property  does  become  clothed  with 
a  public  interest  when  used  in  a  manner  to  make  it  of  public 
consequence,  and  affect  the  community  at  large.  When,  therefore, 
one  devotes  his  property  to  a  use  in  which  the  public  has  an 
interest,  he,  in  effect,  grants  to  the  public  an  interest  in  that  use, 
and  must  submit  to  be  controlled  by  the  public  for  the  common 
good,  to  the  extent  of  the  interest  he  has  thus  created.  He  may 
withdraw  his  grant  by  discontinuing  the  use;  but,  so  long  as  he 
maintains  the  use,  he  must  submit  to  the  control.^ 

In  later  times,  the  same  principle  came  under  consideration  in 
the  Supreme  Court  of  Alabama.  That  court  was  called  upon, 
in  1841,  to  decide  whether  the  power  granted  to  the  city  of  Mobile 
to  regulate  the  weight  and  price  of  bread  was  unconstitutional, 
and  it  was  contended  that  "  it  would  interfere  with  the  right  of 
the  citizen  to  pursue  his  lawful  trade  or  calling  in  the  mode  his 
judgment  might  dictate ; "  but  the  court  said,  "  there  is  no  motive 
...  for  tliis  interference  on  the  part  of  the  legislature  with  the 
lawful  actions  of  individuals,  or  the  mode  in  which  private  property 
shall  be  enjoyed,  unless  such  calling  affects  the  })ublic  interest,  or 
private  property  is  employed  in  a  manner  which  directly  affects 
the  body  of  the  people.  Upon  this  principle,  in  this  State,  tavern- 
keepers  are  licensed;  .  .  .  and  the  County  Court  is  required,  at 

2  Quotations  from  Lord  ITale's  Do  .Ture  Maris  with  regard  to  ferries,  and 
from  the  same  author's  D(>  Portibus  Maris  with  regard  to  public  wharves, 
aud  from  the  opinions  in  AUnutt  v.  Inglis,  supra,  are  omitted. —  Ed. 


SEC.    III.]  LEGISLATION.  35 

least  once  a  year,  to  settle  the  rates  of  innkeepers.  Upon  the  same 
principle  is  founded  the  control  which  the  legislature  has  always 
exercised  in  the  establishment  and  regulation  of  mills,  ferries, 
bridges,  turnpike  roads,  and  other  kindred  subjects."  Mobile  v. 
Yuille,  3  Ala.  n.  s.  140. 

From  the  same  source  comes  the  power  to  regulate  the  charges 
of  common  carriers,  which  was  done  in  England  as  long  ago  as 
the  third  year  of  the  reign  of  William  and  Mary,  and  continued 
until  within  a  comparatively  recent  period.  And,  in  the  first  statute 
we  find  the  following  suggestive  preamble,  to  wit :  — 

"  And  whereas  divers  wagoners  and  other  carriers,  by  combina- 
tion amongst  themselves,  have  raised  the  prices  of  carriage  of 
goods  in  many  places  to  excessive  rates,  to  the  great  injury  of 
the  trade :  Be  it,  therefore,  enacted,"  &c.  3  W.  &  M.  e.  13,  §  24 ; 
3  Stat,  at  Large  (Great  Britain),  481. 

Common  carriers  exercise  a  sort  of  public  ofBce,  and  have  duties 
to  perform  in  which  the  public  is  interested.  New  Jersey  Nav. 
Co.  V.  Merchants'  Bank,  6  How.  382.  Their  business  is,  therefore, 
**  affected  with  a  public  interest,"  within  the  meaning  of  the  doc- 
trine which  Lord  Hale  has  so  forcibly  stated. 

But  we  need  not  go  further.  Enough  has  already  been  said  to 
show  that,  when  private  property  is  devoted  to  a  public  use,  it  is 
subject  to  public  regulation.  It  remains  only  to  ascertain  whether 
the  warehouses  of  these  plaintiffs  in  error,  and  the  business  which 
is  carried  on  there,  come  within  the  operation  of  this  principle. 

For  this  purpose  we  accept  as  true  the  statements  of  fact  con- 
tained in  the  elaborate  brief  of  one  of  the  counsel  of  the  plaintiffs 
in  error.  From  these  it  appears  that  "  the  great  producing  region 
of  the  West  and  Northwest  sends  its  grain  by  water  and  rail  to 
Chicago,  where  the  greater  part  of  it  is  shipped  by  vessel  for 
transportation  to  the  seaboard  by  the  Great  Lakes,  and  some  of 
it  is  forwarded  by  railway  to  the  Eastern  ports.  .  .  .  Vessels,  to 
some  extent,  are  loaded  in  the  Chicago  harbor,  and  sailed  through 
the  St.  Lawrence  directly  to  Europe.  .  .  .  The  quantity  [of  grain] 
received  in  Chicago  has  made  it  the  greatest  grain  market  in 
the  world.  This  business  has  created  a  demand  for  means  by 
which  the  immense  quantity  of  grain  can  be  handled  or  stored,  and 
these  have  been  found  in  grain  warehouses,  which  are  commonly 
called  elevators,  because  the  grain  is  elevated  from  the  boat  or 
car,  by  machinery  operated  by  steam,  into  the  bins  prepared  for 
its  reception,  and  elevated  from  the  bins,  by  a  like  process,  into  the 
vessel  or  car  which  is  to  carry  it  on.  .  .  .  In  this  way  the  largest 
traffic  between  the  citizens  of  the  country  north  and  west  of  Chicago 
and  the  citizens  of  the  country  lying  on  the  Atlantic  coast  north 


36  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

of  Washington  is  in  grain  which  passes  through  the  elevators  of 
Chicago.  In  this  way  the  trade  in  gi"ain  is  carried  on  by  the  in- 
habitants of  seven  or  eight  of  the  great  States  of  the  West  with 
four  or  five  of  the  States  lying  on  the  sea-shore,  and  forms  the 
largest  part  of  inter-state  commerce  in  these  States.  The  grain 
warehouses  or  elevators  in  Chicago  are  immense  structures,  holding 
from  300,000  to  1,000,000  bushels  at  one  time,  according  to  size. 
They  are  divided  into  bins  of  large  capacity  and  great  strength. 
.  .  .  They  are  located  with  the  river  harbor  on  one  side  and  the 
railway  tracks  on  the  other;  and  the  grain  is  run  through  them 
from  car  to  vessel,  or  boat  to  car,  as  may  be  demanded  in 
the  course  of  business.  It  has  been  found  impossible  to  preserve 
each  owner's  grain  separate,  and  this  has  given  rise  to  a  system 
of 'inspection  and  grading,  by  which  the  grain  of  diiferent  owners 
is  mixed,  and  receipts  issued  for  the  number  of  bushels  which  are 
negotiable,  and  redeemable  in  like  kind,  upon  demand.  This  mode 
of  conducting  the  business  was  inaugurated  more  than  twenty  years 
ago,  and  has  grown  to  immense  proportions.  The  railways  have 
found  it  impracticable  to  own  such  elevators,  and  public  policy 
forbids  the  transaction  of  such  business  by  the  carrier;  the  owner- 
ship has,  therefore,  been  by  private  individuals,  who  have  embarked 
their  capital  and  devoted  their  industry  to  such  business  as  a  private 
pursuit." 

In  this  connection  it  must  also  be  borne  in  mind  that,  although 
in  1874  there  were  in  Chicago  fourteen  warehouses  adapted  to 
this  particular  business,  and  owned  by  about  thirty  persons,  nine 
business  firms  controlled  them,  and  that  the  prices  charged  and 
received  for  storage  were  such  "  as  have  been  from  year  to  year 
agreed  upon  and  established  by  the  different  elevators  or  warehouses 
in  the  city  of  Chicago,  and  which  rates  have  been  annually  published 
in  one  or  more  newspapers  printed  in  said  city,  in  the  month  of 
January  in  each  year,  as  the  establisbed  rates  for  the  year  then  next 
ensuing  such  publication."  Thus  it  is  apparent  tbat  all  the  elevat- 
ing facilities  through  which  these  vast  productions  "  of  seven  or 
eight  great  States  of  the  West"  must  pass  on  the  way  "to  four 
or  five  of  the  States  on  the  seashore  "  may  be  a  "  virtual  "  monopoly. 

Under  such  circumstances  it  is  difficult  to  see  why,  if  the  com- 
mon carrier,  or  the  miller,  or  the  ferryman,  or  the  innkeeper,  or 
the  wharfinger,  or  the  baker,  or  the  cartman,  or  the  hackney- 
coachman,  pursues  a  public  employment  and  exercises  "a  sort 
of  public  office,"  these  plaintiffs  in  error  do  not.  They  stand, 
to  use  again  the  language  of  their  counsel,  in  the  very  "  gateway 
of  commerce,"  and  take  toll  from  all  who  pass.  Their  business 
most  certainlv  "tends  to  a  common  charge,  and  is  become  a  thing 


SEC.   III.]  LEGISLATION.  37 

of  public  interest  and  use."  Every  bushel  of  grain  for  its  passage 
"  pays  a  toll,  which  is  a  common  charge,"  and,  therefore,  according 
to  Lord  Hale,  every  such  warehouseman  "  ought  to  be  under  public 
regulation,  viz.,  that  he  .  .  .  take  but  reasonable  toll."  Certainly, 
if  any  business  can  be  clothed  "  with  a  public  interest,  and  cease 
to  be  juris  privati  only,"  this  has  been.  It  may  not  be  made  so 
by  the  operation  of  the  Constitution  of  Illinois  or  this  statute,  but 
it  is  by  the  facts. 

JSTeither  is  it  a  matter  of  any  moment  that  no  precedent  can 
be  found  for  a  statute  precisely  like  this.  It  is  conceded  that 
the  business  is  one  of  recent  origin,  that  its  growth  has  been 
rapid,  and  that  it  is  already  of  great  importance.  And  it  must 
also  be  conceded  that  it  is  a  business  in  which  the  whole  public 
has  a  direct  and  positive  interest.  It  presents,  therefore,  a  case 
for  the  application  of  a  long-known  and  well-established  principle 
in  social  science,  and  this  statute  simply  extends  the  law  so  as  to 
meet  this  new  development  of  commercial  progress.  There  is  no 
attempt  to  compel  these  owners  to  grant  the  public  an  interest  in 
their  property,  but  to  declare  their  obligations,  if  they  use  it  in  this 
particular  manner. 

It  matters  not  in  this  case  that  these  planitiffs  in  error  had  built 
their  warehouses  and  established  their  business  before  the  regula- 
tions complained  of  were  adopted.  What  they  did  was  from  the 
beginning  subject  to  the  power  of  the  body  politic  to  require  them 
to  conform  to  such  regulations  as  might  be  established  by  the  proper 
authorities  for  the  common  good.  They  entered  upon  their  busi- 
ness and  provided  themselves  with  the  means  to  carry  it  on  subject 
to  this  condition.  If  they  did  not  wish  to  submit  themselves  to 
such  interference,  they  should  not  have  clothed  the  public  with  an 
interest  in  their  concerns.  The  same  principle  applies  to  them 
that  does  to  the  proprietor  of  a  hackney-carriage,  and  as  to  him  it 
has  never  been  supposed  that  he  was  exempt  from  regulating  statutes 
or  ordinances  because  he  had  purchased  his  horses  and  carriage  and 
established  his  business  before  the  statute  or  the  ordinance  was 
adopted. 

It  is  insisted,  however,  that  the  owner  of  property  is  entitled  to  a 
reasonable  compensation  for  its  use,  even  though  it  be  clothed 
with  a  public  interest,  and  that  what  is  reasonable  is  a  judicial  and 
not  a  legislative  question. 

As  has  already  been  shown,  the  practice  has  been  otherwise.  In 
countries  where  the  common  law  prevails,  it  has  been  customary 
from  time  immemorial  for  the  legislature  to  declare  what  shall  be  a 
reasonable  compensation  under  such  circumstances,  or,  perhaps  more 
properly  speaking,  to  fix  a  maximum  beyond  which  any  charge  made 


38  BASES   OF    PUBLIC    SERVICE  DUTIES.  [CHAP.    I. 

would  be  unreasonable.  Undoubtedly,  in  mere  private  contracts, 
relating  to  matters  in  which  the  public  has  no  interest,  what  is 
reasonable  must  be  ascertained  judicially.  But  this  is  because  the 
legislature  has  no  control  over  such  a  contract.  So,  too,  in  matters 
which  do  affect  the  public  interest,  and  as  to  which  legislative 
control  may  be  exercised,  if  there  are  no  statutory  regulations  upon 
the  subject,  the  courts  must  determine  what  is  reasonable.  The 
controlling  fact  is  tlie  power  to  regulate  at  all.  If  that  exists,  the 
right  to  establish  the  maximum  of  charge,  as  one  of  the  means 
of  regulation,  is  implied.  In  fact,  the  common-law  rule,  which 
requires  the  charge  to  be  reasonable,  is  itself  a  regulation  as  to  price. 
Without  it  the  owner  could  make  his  rates  at  will,  and  compel  the 
public  to  yield  to  his  terms,  or  forego  the  use. 

But  a  mere  common-law  regulation  of  trade  or  business  may  be 
changed  by  statute.  A  person  has  no  property,  no  vested  interest, 
in  any  rule  of  the  common  law.  That  is  only  one  of  the  forms  of 
municipal  law,  and  is  no  more  sacred  than  any  other.  Eights  of 
property  which  have  been  created  by  the  common  law  cannot  be 
taken  away  without  due  process;  but  the  law  itself,  as  a  rule  of 
conduct,  may  be  changed  at  the  will,  or  even  at  the  whim,  of  the 
legislature,  unless  prevented  by  constitutional  limitations.  Indeed, 
the  great  office  of  statutes  is  to  remedy  defects  in  the  common  law 
as  they  are  developed,  and  to  adapt  it  to  the  changes  of  time  and 
circumstances.  To  limit  the  rate  of  charge  for  services  rendered  in 
a  public  employment,  or  for  the  use  of  property  in  which  the  public 
has  an  interest,  is  only  changing  a  regulation  which  existed  before. 
It  establishes  no  new  principle  in  the  law,  but  only  gives  a  new 
effect  to  an  old  one. 

We  know  that  this  is  a  power  which  may  be  abused;  but  that 
is  no  argument  against  its  existence.  For  protection  against  abuses 
by  legislatures  the  people  must  resort  to  the  polls,  not  to  the 
courts.^ 

Judgment  affirmed^ 

Mr.  Justice  Field  and  Mr.  Justice  Strong  dissented. 
Mr.  Justice  Field.     It  is  true  that  the  legislation  which  secures 
to  all  protection  in  their  rights,  and  the  equal  use  and  enjoyment 

3  The  rest  of  this  opinion  is  devoted  to  defendant's  contention  that  the 
statute  in  question  is  repugnant  to  section  8,  article  1,  and  to  section  9  of 
the  ('onstitution  of  the  United  States.  These  contentions  wore  held  not  to 
be  valid. —  P]d. 

♦  Mr.  .Tustice  Bradley,  who  concurred  with  the  Chief  Justice,  said 
later  of  Munn  v.  Illinois :  "  The  inquiry  there  was  as  to  the  extent  of  the 
police  power  in  cases  where  the  public  interest  is  affected  ;  and  we  held  that 
when  an  employment  or  business  becomes  a  matter  of  such  public  interest 
and  importance  as  to  create  a  common  charge  or  burden  upon  the  citizens; 
in  other  words,  when  it  becomes  a  practical  monopoly,  to  which  the  citizen 


SEC.    III.]  LEGISLATION.  39 

of  their  property,  embraces  an  almost  infinite  variety  of  subjects. 
Whatever  affects  the  peace,  good  order,  morals,  and  health  of  the 
community,  comes  within  its  scope;  and  every  one  must  use  and 
enjoy  his  property  subject  to  the  restrictions  which  such  legislation 
imposes.  What  is  termed  the  police  power  of  the  state,  which, 
from  the  language  often  used  respecting  it,  one  would  suppose  to 
be  an  undefined  and  irresponsible  element  in  government,  can  only 
interfere  with  the  conduct  of  individuals  in  their  intercourse  with 
each  other,  and  in  the  use  of  their  property,  so  far  as  may  be  re- 
quired to  secure  these  objects.  The  compensation  which  the  owners 
of  property,  not  having  any  special  rights  or  privileges  from  the 
government  in  connection  with  it,  may  demand  for  its  use,  or  for 
their  own  services  in  union  with  it,  forms  no  element  of  consideration 
in  prescribing  regulations  for  that  purpose.  If  one  construct  a 
building  in  a  city,  the  State,  or  the  municipality  exercising  a  dele- 
gated power  from  the  State,  may  require  its  walls  to  be  of  sufficient 
thickness  for  the  uses  intended;  it  may  forbid  the  employment  of 
inflammable  materials  in  its  construction,  so  as  not  to  endanger 
the  safety  of  his  neighbors;  if  designed  as  a  theatre,  church,  or 
public  hall,  it  may  prescribe  ample  means  of  egress,  so  as  to  afford 
facility  for  escape  in  case  of  accident ;  it  may  forbid  the  storage  in 
it  of  powder,  nitro-glycerine,  or  other  explosive  material;  it  may 
require  its  occupants  daily  to  remove  decayed  vegetable  and  animal 
matter,  which  would  otherwise  accumulate  and  engender  disease; 
it  may  exclude  from  it  all  occupations  and  business  calculated  to 
disturb  the  neighborhood  or  infect  the  air.  Indeed,  there  is  no  end 
of  regulations  with  respect  to  the  use  of  property  which  may  not  be 
legitimately  prescribed,  having  for  their  object  the  peace,  good  order, 
safety,  and  health  of  the  community,  thus  securing  to  all  the 
equal  enjoyment  of  their  property;  but  in  establishing  these  regu- 
lations it  is  evident  that  compensation  to  the  owner  for  the  use 
of  his  property,  or  for  his  services  in  union  with  it,  is  not  a  matter 
of  any  importance:  whether  it  be  one  sum  or  another  does  not 
affect  the  regulation,  either  in  respect  to  its  utility  or  mode  of 
enforcement.  One  may  go,  in  like  manner,  through  the  whole  round 
of  regulations  authorized  by  legislation.  State  or  municipal,  under 
what  is  termed  the  police  power,  and  in  no  instance  will  he  find 
that  the  compensation  of  the  owner  for  the  use  of  his  property  has 
any  influence  in  establishing  them.  It  is  only  where  some  right  or 
privilege  is  conferred  by  the  government  or  municipality  upon  the 
owner,  which  he  can  use  in  connection  with  his  property,  or  by 

is  compelled  to  resort,  and  by  means  of  which  a  tribute  can  be  exacted  from 
the  community,  it  is  subject  to  regulation  by  the  legislative  power."  Sink- 
ing Fund  Cases  (1878),  99  U.  S.  700,  745. 


40  BASES    OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

means  of  which  the  use  of  his  property  is  rendered  more  valuable  to 
him,  or  he  thereby  enjoys  an  advantage  over  others,  that  the  com- 
pensation to  be  received  by  him  becomes  a  legitimate  matter  of 
regulation.  Submission  to  the  regulation  of  compensation  in  such 
cases  is  an  implied  condition  of  the  grant,  and  the  State,  in  exer- 
cising its  power  of  prescribing  the  compensation  only  determines 
the  conditions  upon  which  its  concession  shall  be  enjoyed.  When 
the  privilege  ends,  the  power  of  regulation  ceases. 

Mr.  Justice  Strong.  When  the  judgment  in  this  case  was  an- 
nounced by  direction  of  a  majority  of  the  court,  it  was  well  known 
by  all  my  brethren  that  I  did  not  concur  in  it.  It  had  been  my 
intention  to  prepare  a  dissenting  opinion,  but  I  found  no  time  for 
the  preparation,  and  I  Avas  reluctant  to  dissent  in  such  a  case 
without  stating  my  reasons.  Mr.  Justice  Field  has  now  stated 
them  as  fully  as  I  can,  and  I  concur  in  what  he  has  said.^ 


PEOPLE  V.  BUDD. 

117  N.  Y.  1.     1889.^ 

Andrews,  J.  The  main  question  upon  this  record  is,  whether 
the  legislation  fixing  the  maximum  charge  for  elevating  grain, 
contained  in  the  act,  chapter  581  of  the  Laws  of  1888,  is  valid  and 
constitutional.  The  act,  in  its  first  section,  fixes  the  maximum 
charge  for  receiving,  weighing  and  discharging  grain  by  means  of 
floating  and  stationary  elevators  and  warehouses  in  this  state,  at 
five-eighths  of  one  cent  a  bushel,  and  for  trimming  and  shoveling 
to  the  leg  of  the  elevator  in  the  process  of  liandling  gi-ain  by  means 
of  elevators,  "  lake  vessels  or  propellers,  the  ocean  vessels  or  steam- 
ships, and  canal  boats,"  shall,  the  section  declares,  only  be  required 
to  pay  the  actual  cost.  The  second  section  makes  a  violation  of  the 
act  a  misdemeanor,  punishable  by  a  fine  of  not  less  than  $250.  The 
third  section  gives  a  civil  remedy  to  a  party  injured  by  a  violation 
of  the  act.  The  fourth  section  excludes  from  the  operation  of 
the  act  any  village,  town,  or  city  having  less  than  one  hundred  and 
thirty  thousand  population.  Tlie  defendant,  the  manager  of  a 
stationary  elevator  in  the  city  of  Bufi^alo,  on  the  19th  day  of  Sep- 
tember, 1888,  exacted  from  the  Lehigh  Valley  Transportation 
Company  for  elevating,  raising  and  discharging  a  cargo  of  corn  from 
a  lake  propeller  at  his  elevator,  the  sum  of  one  cent  a  bushel,  and 

5  Two  judges  also  dissented  when  this  case  was  before  the  Supreme  Court 
of  Illinois.     Munn  v.  People  (1873),  69  111.  80. 

1  The  arguments  of  counsel,  and  parts  of  the  opinion  of  Andrews,  .T.,  are 
omitted,  as  well  as  the  dissenting  opinions  of  Guay  and  Peckiiam,  JJ. 


SEC.   III.]  LEGISLATION.  41 

for  shoveling  to  the  leg  of  the  elevator,  the  carrier  was  charged 
and  compelled  to  pay  four  dollars  for  each  thousand  bushels.  The 
shoveling  of  grain  to  the  leg  of  an  elevator  at  the  port  of  Buffalo 
is  now  performed  pursuant  to  an  arrangement  made  since  the 
passage  of  the  act  of  1888,  by  a  body  of  men  known  as  the  Shovelers' 
Union,  who  pay  the  elevator  one  dollar  and  seventy-five  cents  a 
thousand  bushels,  for  the  use  of  the  steam  shovel,  a  part  of  the 
machinery  connected  with  the  elevator,  operated  by  steam,  and 
who  for  their  services  and  the  expense  of  the  steam-shovel  charge 
the  carrier  for  each  thousand  bushels  of  grain  shoveled  the  sum  of 
four  dollars.  The  defendant  was  indicted  for  a  violation  of  the 
act  of  1888.  The  indictment  contains  a  single  count  charging  a 
violation  of  the  first  section  in  two  particulars,  viz. :  In  exacting 
more  than  the  legal  rate  for  elevating  the  cargo,  and  exacting  more 
than  the  actual  cost  for  shovelling  the  grain  to  the  leg  of  the  elevator. 
Before  reaching  the  main  question  there  is  a  subordinate  question 
to  be  considered. 

Passing  this  point,  we  come  to  the  main  question,  whether  legis- 
lative power  under  the  State  Constitution  exists  in  the  legislature 
to  prescribe  a  maximum  charge  for  elevating  grain  by  stationary 
elevators  owned  by  individuals  or  corporations,  who  have  appropri- 
ated their  property  to  this  use  and  are  engaged  in  this  business. 
The  ascertainment  of  the  exact  boundaries  of  legislative  power 
under  the  rigid  constitutional  system  of  the  American  states  is  in 
many  cases  attended  with  great  perplexity  and  difficulty.  The 
People  have  placed  in  the  Constitution  a  variety  of  restrictions 
on  legislative  power,  and  chief  among  them  is  that  which  ordains 
that  no  person  shall  be  deprived  of  life,  liberty  or  property  without 
due  process  of  law.  The  protection  of  private  property  is  one  of 
the  main  purposes  of  government,  but  no  one  holds  his  property 
by  such  an  absolute  tenure  as  to  be  freed  from  the  power  of  the 
legislature  to  impose  restraints  and  burdens  required  lay  the  public 
good,  or  proper  and  necessary  to  secure  the  equal  rights  of  all. 
This  power  of  government,  the  power  as  expressed  by  Taney, 
C.  J.  (5  How.  583),  "inherent  in  every  sovereignty,  the  power 
to  govern  men  and  things,"  is  not,  however,  an  uncontrollable  or 
despotic  authority,  subject  to  no  limitation,  exercisable  with  or 
without  reason  in  the  discretion  or  at  the  whim  or  caprice  of  the 
legislative  body.  But  within  its  legitimate  domain  the  power  is 
original,  absolute  and  indefeasible.  It  vested  in  the  legislative 
department  of  the  government  at  its  creation,  without  affirmative 
grant  or  definition,  as  an  essential  political  power  and  attribute  of 
government,  and  personal  rights  and  rights  of  property  are  sub- 


42  BASES   OF   PUBLIC   SERVICE  DUTIES.  [CHAP.   I. 

ordinate  to  this  supreme  power  acting  within  its  appropriate  sphere. 
It  may  be  exercised  so  as  to  impair  the  value  of  property  or  limit 
or  restrict  the  uses  of  property,  yet  in  this  there  is  no  infringement 
of  the  constitutional  guaranty,  because  that  guaranty  is  not  to 
be  construed  as  liberating  persons  or  property  from  the  just 
control  of  the  laws.  It  was  designed  for  the  protection  of  personal 
and  private  rights  against  incroachments  by  the  legislative  body 
not  sanctioned  by  the  principles  of  civil  liberty  as  held  and 
understood  when  the  Constitution  was  adopted.  The  boundary 
of  legislative  power  in  the  enactment  of  laM^s  in  the  assumed 
exercise  of  this  power  of  sovereignty,  which  injuriously  affects  per- 
sons or  propert}^,  is  indistinct,  and  no  rule  or  definition  can  be 
formulated  under  which,  in  all  cases,  it  can  be  readily  determined 
whether  a  statute  does  or  does  not  transgress  the  fundamental  law. 
The  power  of  the  British  parliament  is  not  the  test  of  legislative 
power  under  the  written  Constitution  of  the  American  States. 
But  the  great  landmarks  of  civil  liberty,  embodied  in  our  State 
Constitutions,  were  established  by  our  English  ancestors,  and  upon 
questions  such  as  the  one  now  before  us  we  may  study  with 
profit  the  principles  and  practice  of  the  law  of  England.  When  a 
statute  is  challenged  as  overstepping  the  boundaries  of  legislative 
power,  the  object  sought  to  be  obtained  by  the  legislature,  the 
nature  and  functions  of  government,  the  principles  of  the  common 
law,  the  practice  of  legislation  and  legal  adjudications  are  pertinent 
and  important  considerations  and  elements  in  the  determination 
of  the  controversy. 

The  act  in  question  regulates  the  price  of  elevating  grain,  and 
the  regulation  affects  the  compensation  which  may  be  lawfully  de- 
manded for  labor  and  personal  services,  as  well  as  for  the  use 
of  property.  It  fixes  a  maximum  charge  for  labor  and  the  use  of 
property  when  combined,  as  they  of  necessity  are,  in  the  business 
of  elevating  grain.  The  operation  of  the  statute  is  by  its  terms 
limited  to  the  business  carried  on  in  cities  and  towns  having 
a  population  of  not  less  than  one  hundred  and  thirty  thousand, 
practically  to  the  cities  of  Buffalo,  New  York  and  Brooklyn.  The 
circumstances,  also,  substantially  restrict  the  application  of  the  act 
to  grain  brought  to  Buffalo  from  the  upper  lakes  by  water,  and 
there,  by  means  of  elevators,  transshipped  into  canal  boats  and  trans- 
ported through  the  Erie  canal  and  Hudson  river  to  the  harbor  of 
New  York  and  there  discharged  by  elevators  into  warehouses  or 
ocean  vessels.  The  business  of  transporting  grain  by  the  lakes, 
and  thence  by  the  Erie  canal  to  New  York,  is  one  of  great  magni- 
tude. The  case  shows  that  about  one  hundred  and  twenty  mil- 
lions of  bushels  of  grain  annually  come  to  Buffalo  from  the  west. 


SEC.   III.]  LEGISLATION.  43 

The  business  of  elevating  grain  at  that  point  is  mainl}^  con- 
nected with  lake  and  canal  transportation.  It  is  shown  by  official 
records  that  the  receipts  of  grain  at  New  York  in  the  year  1887, 
by  way  of  the  Erie  canal  and  Hudson  river,  during  the  season  of 
canal  navigation,  exceeded  forty-six  million  bushels,  an  amount 
very  largely  in  excess  of  the  amount  received  during  the  same 
period  by  rail  and  by  river  and  coastwise  vessels.  The  elevation 
of  this  grain  from  lake  vessels  to  canal  boats  takes  place  at  Buffalo, 
where  the  case  shows  there  are  thirty  or  forty  elevators,  stationary 
and  floating.  How  many  of  these  elevators  are  actually  employed 
in  the  business  does  not  appear.  The  record  is  silent  as  to  many 
facts  which  might  tend  to  explain  the  relation  of  this  business 
as  actually  conducted,  to  the  public  interests.  It  is  asserted  that 
a  combination  exists,  and  has  for  several  years  existed,  between 
the  elevator  owners  to  maintain  excessive  charges,  by  fixing  a 
uniform  tariff  and  pooling  the  earnings,  and  dividing  them  ratably 
among  all  of  the  elevator  owners,  although  but  a  part  of  the 
elevators  are  actually  operated.  (See  report  of  the  committee  on 
foreign  commerce  of  the  Chamber  of  Commerce  of  New  York, 
made  in  April,  1885.)  There  is  no  evidence  in  the  record  as  to 
the  locations  in  the  port  of  Buffalo  suitable  and  available  for 
stationary  elevators.  It  is  evident  that  they  must  be  placed  where 
they  can  be  reached  by  both  lake  vessels  and  canal  boats,  and  it 
may  reasonably  be  assumed  that  but  a  limited  area  (not  devoted 
to  other  purposes  of  commerce)  is  available  for  the  erection  of 
stationary  elevators. 

In  determining  whether  the  legislature  can  lawfully  regulate 
and  fix  the  charge  for  elevating  grain  by  private  elevators,  it  must 
be  conceded  that  the  uses  to  which  a  man  may  devote  his  property, 
the  price  which  he  may  charge  for  such  use,  how  much  he  shall 
demand  or  receive  for  his  labor,  and  the  methods  of  conducting 
his  business  are,  as  a  general  rule,  not  the  subject  of  legislative 
regulationj  These  are  a  part  of  our  liberty,  of  which,  under  the 
constitutional  guaranty,  we  cannot  be  deprived.  We  have  no  hesi- 
tation in  declaring  that  unless  there  are  special  conditions  and 
circumstances  which  bring  the  business  of  elevating  grain  within 
principles  which,  by  the  common  law  and  the  practice  of  free 
governments,  justify  legislative  control  and  regulation  in  the  par- 
ticular case,  the  statute  of  1888  cannot  be  sustained.  That  no 
general  power  resides  in  the  legislature  to  regulate  private  business, 
prescribe  the  conditions  under  which  it  shall  be  conducted,  fix  the 
price  of  commodities  or  services,  or  interfere  with  freedom  of 
contract,  we  cannot  doubt.  The  merchant  and  manufacturer,  the 
artisan  and  laborer,  under  our  system  of  government,  are  left  to 


44  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

pursue  and  provide  for  their  own  interests  in  their  own  way,  un- 
trammeled  by  burdensome  and  restrictive  regulations  which,  how- 
ever common  in  rude  and  irregular  times,  are  inconsistent  with 
constitutional  liberty. 

The  justification  of  the  statute  of  Illinois  regulating  the  charge 
for  elevating  and  storing  grain  in  the  elevators  of  that  state  was 
placed  in  the  Munn  Case  upon  that  principle  of  the  common  law 
stated  by  Lord  Hale  in  his  treatise  De  Portibus  Maris  (1  Harg. 
Law  Tracts,  78),  that  when  private  property  is  "  affected  by  a  pub- 
lic interest  it  ceases  to  be  juris  privati  only."  The  principle  of 
the  decision  is  stated  with  great  perspicuity  by  Bradley,  J.,  in  his 
opinion  in  the  Sinking  Fund  Cases  (supra).  He  says:  ^^The 
inquiry  there  was  as  to  the  extent  of  the  police  power  where  the 
public  interest  is  affected;  and  we  held  that  where  an  employment 
becomes  a  matter  of  such  public  interest  and  importance  as  to 
create  a  common  charge  or  burden  upon  the  citizen,  in  other  words, 
when  it  becomes  a  practical  monopoly,  to  which  the  citizen  is  com- 
pelled to  resort  and  by  means  of  which  a  tribute  can  be  exacted 
from  the  community,  it  is  subject  to  regulation  by  the  legislative 
power."J  The  elevators  in  Chicago  had  no  legal  monopoly  in  the 
business  of  elevating  grain.  The  business  was  open  to  all  comers, 
but  the  location  of  the  elevators,  their  connection  with  the  railroads, 
on  which  most  of  the  grain  from  the  grain-producing  states  and 
territories  of  the  west  and  northwest  was  brought  to  Chicago,  the 
necessity  of  using  them  in  the  transfer,  storing  and  transhipment 
of  grain,  created,  as  was  held  by  the  court,  a  virtual  and  practical 
monopoly  which  affected  the  business  and  property  with  a  public 
interest  and  subjected  them  to  regulation  by  law.  The  application 
of  the  language  of  Lord  Hale  and  of  the  principle  that  private 
property  may,  by  its  uses,  cease  to  be  juris  privaii  strictly,  and 
become  affected  by  a  public  interest,  to  the  business  of  elevating 
grain  in  Chicago,  was  combated  and  denied  by  Field,  J.,  in  his 
very  able  and  forcible  dissenting  opinion.  "  It  is,"  he  declared, 
"only  where  some  privilege  in  the  bestowment  of  the  government 
is  enjoyed  in  connection  with  (private)  property,  that  it  is  affected 
by  a  public  interest  in  any  proper  sense  of  the  terms.  It  is  the 
public  privilege  connected  with  the  use  of  the  property  which 
creates  the  public  interest  in  it."  There  can  be  no  doubt  that 
where  tlie  government  confers  a  special  privilege  upon  a  citizen, 
not  of  common  right,  it  may  annex  such  conditions  upon  its 
enjoyment  as  it  sees  fit.  Nor  can  there  be  any  question  that  where 
an  individual  has  a  legal  monopoly  to  use  his  property  for  a 
public  purpose,  and  the  public  have  an  interest  in  the  use,  he 
is  subject  to  an  obligation  cast  upon  him  by  the  common  law  to 


SEC.   III.]  LEGISLATION.  45 

demand  only  a  reasonable  compensation  for  the  use.  This  is  stated 
with  great  clearness  by  Lord  Ellenborough  in  AUnutt  v.  Inglis  ( 13 
East  527).  "(There  is,"  he  said,  "  no  doubt  that  the  general  prin- 
ciple is  favored  both  in  law  and  justice,  that  every  man  may  fix 
what  price  he  pleases  upon  his  own  property  or  the  use  of  it: 
but  if,  for  a  particular  purpose,  the  public  have  a  right  to  resort 
to  his  premises  and  make  use  of  them,  and  he  have  a  monopoly 
in  them  for  that  purpose,  if  he  will  take  the  benefit  of  that  mo- 
nopoly, he  must  as  an  equivalent  perform  the  duty  attached  to  it 
on  reasonable  terms."/  But  the  question  is  whether  the  power  of 
the  legislature  to  regulate  charges  for  the  use  of  property  and  the 
rendition  of  services  connected  with  it,  depends  in  every  case  upon 
the  circumstance  that  the  owner  of  the  property  has  a  legal  monopoly 
or  privilege  to  use  the  property  for  the  particular  purpose,  or  has 
some  special  protection  from  the  government,  or  some  peculiar 
benefit  in  the  prosecution  of  his  business. 

It  is  said  that  the  control  which  the  legislature  is  permitted 
to  exercise  over  the  business  of  common  carriers  is  a  survival  of 
that  class  of  legislation  which  in  former  times  extended  to  the 
details  of  personal  conduct  and  assumed  to  regulate  the  private 
affairs  and  business  of  men  in  the  minutest  particulars.  This  is 
true.  But  it  has  survived  because  it  was  entitled  to  survive.  By 
reason  of  the  changed  conditions  of  society  and  a  truer  appreciation 
of  the  proper  functions  of  government,  many  things  have  fallen 
out  of  the  range  of  the  police  power  as  formerly  recognized,  the 
regulation  of  which,  by  legislation,  would  now  be  regarded  as 
invading  personal  liberty.  But  society  could  not  safely  surrender 
the  power  to  regulate  by  law  the  business  of  common  carriers. 
Its  value  has  been  infinitely  increased  by  the  conditions  of  modern 
commerce,  under  which  the  carrying  trade  of  the  country  is,  to 
a  great  extent,  absorbed  by  corporations,  and,  as  a  check  upon 
the  greed  of  these  consolidated  interests,  the  legislative  power 
of  regulation  is  demanded  by  imperative  public  interests.  The 
same  principle  upon  which  the  control  of  common  carriers  rests 
has  enabled  the  state  to  regulate  in  the  public  interest  the  charges 
of  telephone  and  telegraph  companies,  and  to  make  the  telephone 
and  telegraph,  those  important  agencies  of  commerce,  subservient 
to  the  wants  and  necessities  of  society.  These  regulations  in  no 
way  interfere  with  a  rational  liberty  —  liberty  regulated  by  law. 

There  are  elements  of  publicity  in  the  business  of  elevating  grain 
which  peculiarly  affect  it  with  a  public  interest.  They  are  found 
in  the  nature  and  extent  of  the  business,  its  relation  to  the  com- 
merce of  the  state  and  country,  and  the  practical  monopoly  enjoyed 
by  those  engaged  in  it.     The  extent  of  the  business  is  show^n  by 


46  BASES   OF    PUBLIC    SERVICE  DUTIES.  [CHAP.    I. 

the  facts  to  which  we  have  referred.  A  large  proportion  of  the 
surplus  cereals  of  the  country  passes  through  the  elevators  at 
Buifalo  and  finds  its  way  through  the  Erie  canal  and  Hudson  river 
to  the  seaboard  at  New  York,  from  whence  they  are  distributed  to 
the  markets  of  the  world.  The  business  of  elevating  grain  is  an 
incident  to  the  business  of  transportation.  The  elevators  are  in- 
dispensable instrumentalities  in  the  business  of  the  common  carrier. 
It  is  scarcely  too  much  to  say  that,  in  a  broad  sense,  the  elevators 
perform  the  work  pf  carriers.  They  are  located  upon  or  adjacent 
to  the  waters  of  the  state,  and  transfer  from  the  lake  vessels  to 
the  canal  boats,  or  from  the  canal  boats  to  the  ocean  vessels,  the 
cargoes  of  grain,  and  thereby  perform  an  essential  service  in 
transportation.  It  is  by  means  of  the  elevators  that  transportation 
of  grain  by  water  from  the  upper  lakes  to  the  seaboard  is  rendered 
possible.  It  needs  no  argument  to  show  that  the  business  of  elevat- 
ing grain  has  a  vital  relation  to  commerce  in  one  of  its  most  impor- 
tant aspects.  Every  excessive  charge  made  in  the  course  of  transpor- 
tation of  grain  is  a  tax  on  commerce,  and  the  public  have  a  deep 
interest  that  no  exorbitant  charges  shall  be  exacted  at  any  point 
upon  the  business  of  transportation. 

The  third  element  of  publicity  which  tends  to  distinguish  the 
business  of  elevating  grain  from  general  commercial  pursuits,  is 
the  practical  monopoly  which  is  or  may  be  connected  with  its 
prosecution.  In  the  city  of  Buffalo  the  elevators  are  located  at 
the  junction  of  the  canal  with  Lake  Erie.  The  owners  of  gi'ain 
are  compelled  to  use  them  in  transporting  cargoes.  The  area 
upon  which  it  is  practicable  to  erect  them  is  limited.  The  struc- 
tures are  expensive,  and  the  circumstances  afford  great  facility  for 
combination  among  the  owners  of  elevators  to  fix  and  maintain 
an  exorbitant  tariff  of  charges  and  to  bring  into  the  combination 
any  new  elevator  which  may  be  erected  and  employ  it  or  leave  it 
unemployed,  but  in  either  case  permit  it  to  share  in  the  aggregate 
earnings.  It  is  evident  that  if  such  a  combination,  in  fact,  exists, 
the  principle  of  free  competition  in  trade  is  excluded.  The  precise 
object  of  the  combination  would  be  to  prevent  competition.  The 
result  of  such  a  combination  would  necessarily  be  to  subject  the 
lake  vessels  and  canal  boats  to  any  exaction  which  the  elevator 
owners  miglit  see  fit  to  impose  for  the  service  of  the  elevator, 
and  the  elevator  owners  would  be  able  to  levy  a  tribute  on  the  com- 
munity, the  extent  of  which  would  be  limited  only  by  their  discretion. 

It  is  upon  these  various  circumstances  that  tlie  court  is  called 
upon  to  determine  whether  the  legislature  may  interfere  and  regu- 
late the  charges  of  elevators.  It  is  purely  a  question  of  legislative 
power.     If  the  power  to  legislate  exists,  the  court  has  nothing  to 


SEC.   III.]  LEGISLATION.  4? 

do  with  the  policy  or  wisdom  of  the  interference  in  the  particular 
case,  or  with  the  question  of  the  adequacy  or  inadequacy  of  the  com- 
pensation authorized.  "  This  court,"  said  Chase,  Ch.  J.,  in  the 
License  Tax  Cases  (5  Wall.  469),  "can  know  nothing  of  public 
policy,  except  from  the  Constitution  and  the  laws,  and  the  course 
of  administration  and  decision.  It  has  no  legislative  powers.  It 
cannot  amend  or  modify  any  legislative  act.  It  cannot  examine 
questions  as  expedient  or  inexpedient,  as  politic  or  impolitic.  Con- 
siderations of  that  sort  must  be  addressed  to  the  legislature.  Ques- 
tions of  policy  there  are  concluded  here." 

Can  it  be  said,  in  view  of  the  exceptional  circumstances,  that 
the  business  of  elevating  grain  is  not  "  affected  with  a  public  in- 
terest," within  the  language  of  Lord  Hale,  or  that  the  case  does 
not  fall  within  the  principle  which  permits  the  legislature  to  regu- 
late the  business  of  common  carriers,  ferrymen,  innkeepers,  hack- 
men  and  interest  on  the  use  of  money?  It  seems  to  us  that 
speculative,  if  not  fanciful,  reasons  have  been  assigned  to  account 
for  the  right  of  legislative  regulation  in  these  and  other  cases. 

The  underlying  principle  is  that  business  of  certain  kinds  holds 
such  a  peculiar  relation  to  the  public  interests  that  there  is  super- 
induced upon  it  the  right  of  public  regulation.  We  rest  the  power 
of  the  legislature  to  control  and  regulate  elevator  charges  on  tlic 
nature  and  extent  of  the  business,  the  existence  of  a  virtual  mo- 
nopoly, the  benefit  derived  from  the  canal,  creating  the  business  and 
making  it  possible,  the  interest  to  trade  and  commerce,  the  rela- 
tion of  the  business  to  the  prosperity  and  welfare  of  the  state, 
and  the  practice  of  legislation  in  analogous  cases.  These  circum- 
stances, collectively,  create  an  exceptional  case  and  justify  legis- 
lative regulation.  The  judgment  should  he  affirmedr 

2  This  decision  was  affirmed  by  the  Supreme  Court  of  the  United  States. 
Budd  V.  New  York  (1891),  143  U.  S.  517.  Mr.  Justice  Blatchford,  in 
delivering  the  opinion  of  the  courts  said  at  the  outset  that  "  the  main  ques- 
tion involved  in  this  case  is  whether  this  court  will  adhere  to  its  decision 
in  Munn  v.  Illinois."  After  reviewing  the  opinion  of  Andrews,  J.,  in  Peo- 
ple V.  Budd,  he  said:  "We  regard  these  views  which  we  have  referred  to 
as  announced  by  the  Court  of  Appeals  of  New  York,  so  far  as  they  support 
the  validity  of  the  statute  in  question,  as  sound  and  just."  Mr.  .Justice 
Blatcuford  concluded  by  reviewing  the  opinion  of  Mr.  Chief  Justice 
Waite  in  Munn  v.  Illinois,  and  the  cases  in  which  that  opinion  had  been 
followed  or  approved. —  Eu. 

Mr.  Justice  Brewer  wrote  the  following  dissenting  opinion,  which  was 
concurred  in  by  Mk.  Justice  Field  and  Mr.  Justice  Brown  : 

"  I  dissent  from  the  opinion  and  judgment  in  these  cases.  The  main 
proposition  upon  which  they  rest  is,  in  my  judgment,  radically  unsound. 
It  is  the  doctrine  of  Munn  v.  Illinois,  94  U.  S.  113,  reaffirmed.  That  is. 
as  declared  in  the  syllabus  and  stated  in  the  opinion  in  that  case  :  '  When, 
therefore,  one  devotes  his  property  to  a  use  in  which  the  public  has  an 
interest,  he,  in  effect,  grants  to  the  public  an  interest  in  that  use,  and  must 
submit  to  be  controlled  by  the  public  for  the  common  good,  to  the  extent, 
of  the  interest  he  has  thus  created.'  The  elaborate  discussions  of  the  ques- 
tion  in   the   dissenting  opinions   in   that  case,   and   the  present  cases   when 


48  BASES   OF   PUBLIC   SERVICE  DUTIES.  [CHAP.   I. 

under  consideration  in  the  Court  of  Appeals  of  the  State  of  New  York,  seena 
to  forbid  anything  more  than  a  general  declaration  of  dissent.  The  vice  of 
the  doctrine  is,  that  it  places  a  public  interest  in  the  use  of  property  upon 
the  same  basis  as  a  public  use  of  property.  Property  is  devoted  to  a  public 
use  when,  and  only  when,  the  use  is  one  which  the  public  in  its  organized 
capacity,  to  wit,  the  State,  has  a  right  to  create  and  maintain,  and,  there- 
fore, one  which  all  the  public  have  a  right  to  demand  and  share  in.  'J'he 
use  is  public,  because  the  public  may  create  it,  and  the  individual  creating 
it  is  doing  thereby  and  pro  tanto  the  work  of  the  State.  The  creation  of 
all  highways  is  a  public  duty.  Railroads  are  highways./  The  State  may 
build  them.  If  an  individual  does  that  work,  he  is  pro  tanto  doing  the 
work  of  the  State.  He  devotes  his  property  to  a  public  use.  The  State 
doing  the  work  fixes  the  price  for  the  use.  It  does  not  lose  the  right  to 
fix  the  price,  because  an  individual  voluntai'ily  undertakes  to  do  the  work. 
But  this  public  use  is  very  different  from  a  public  interest  in  the  use.: 
There  is  scarcely  any  property  in  whose  use  the  public  has  no  interest.  No 
man  liveth  unto  himself  alone,  and  no  man's  property  is  beyond  the  touch 
of  another's  welfare.  Everything,  the  manner  and  extent  of  whose  use 
affects  the  well-being  of  others,  is  property  in  whose  use  the  public  has  an 
interest.  Take,  for  instance,  the  only  store  in  a  little  village.  All  the 
public  of  that  village  are  interested  in  it ;  interested  in  the  quantity  and 
quality  of  the  goods  on  its  shelves,  and  their  prices,  in  the  time  at  which 
it  opens  and  closes,  and,  generally,  in  the  way  in  which  it  is  managed ;: 
in  short,  interested  in  the  use.  Does  it  follow  that  that  village  nublic  has 
a  right  to  control  these  matters?  That  which  is  true  of  the  single  small 
store  in  the  village,  is  also  true  of  the  largest  mercantile  establishment  in 
the  great  city.  The  magnitude  of  the  business  does  not  change  the  prin- 
ciple. There  may  be  more  individuals  interested,  a  larger  public,  but  still 
the  public.  The  country  merchant  who  has  a  small  warehouse  in  which 
the  neighboring  farmers  are  wont  to  store  their  potatoes  and  grain  prepara- 
tory to  shipment  occupies  the  same  position  as  the  proprietor  of  the  largest 
elevator  in  New  York.  The  public  has  in  each  case  an  interest  in  the  use, 
and  the  same  interest,  no  more  and  no  less.  I  cannot  bring  myself  to  be- 
lieve that  when  the  owner  of  property  has  by  his  industry,  skill  and  money 
made  a  certain  piece  of  his  property  of  large  value  to  many,  he  has  thereby 
deprived  himself  of  the  full  dominion  over  it  which  he  had  when  it  was  of 
comparatively  little  value ;  nor  can  I  believe  that  the  control  of  the  public 
over  one's  property  or  business  is  at  all  dependent  upon  the  extent  to  which 
the  public  is  benefited  by  it. 

"  Surely  the  matters  in  which  the  public  has  the  most  interest,  are  the 
supplies  of  food  and  clothing ;  yet  can  it  be  that  by  reason  of  this  interest 
the  State  may  fix  the  price  at  which  the  butcher  must  sell  his  meat,  or  the 
vendor  of  boots  and  shoes  his  goods?  Men  are  endowed  by  their  Creator 
with  certain  unalienable  rights,  'life,  liberty  and  the  pursuit  of  happiness'; 
and  to  '  secure,'  not  grant  or  create,  these  rights  governments  are  instituted.', 
That  property  which  a  man  has  honestly  acquired  he  retains  full  control 
of,  subject  to  these  limitations :  First,  that  he  shall  not  use  it  to  his 
neighbor's  injury,  and  that  does  not  mean  that  he  must  use  it  for  his 
neighbor's  benefit ;  second,  that  if  he  devotes  it  to  a  public  use,  he  gives 
to  the  public  a  right  to  control  that  use ;  and,  third,  that  whenever  the 
public  needs  require,  the  public  may  take  it  upon  payment  of  due  compen- 
sation. 

"  It  is  suggested  that  there  is  a  monopoly,  and  that  that  justifies  legisla- 
tive interference.  There  are  two  kinds  of  monopoly ;  one  of  law,  the  other 
of  fact.  The  one  exists  when  exclusive  privileges  are  granted.  Such  a 
monopoly,  the  law  which  creates  alone  can  break ;  and  being  the  creation 
of  law  justifies  legislative  control.  A  monopoly  of  fact  any  one  can  break, 
and  there  is  no  necessity  for  legislative  interference.  It  exists  where  any 
one  by  his  money  and  labor  furnishes  facilities  for  business  which  no  one 
else  has.  A  man  puts  up  in  a  city  the  only  building  suitable  for  offices. 
He  has  therefore  a  monopoly  of  that  business ;  but  it  is  a  monopoly  of  fact, 
which  any  one  can  break  who,  with  like  business  courage  puts  his  means 
into  a  similar  building.  Because  of  the  monopoly  feature,  subject  thus 
easily  to  be  broken,  may  the  legislature  regulate  the  price  at  which  he 
will  lease  his  offices?  So,  here,  there  are  no  exclusive  privileges  given  to 
these  elevators.  They  are  not  upon  public  ground.  If  the  business  is 
profitable,  any  one  can  build  another;  the  field  is  open  for  all  the  elevators, 
and  all  the  competition  that  may  1)p  desired.  If  there  be  a  monopoly,  it  is. 
one  of  fact  and  not  of  law,  and  one  which  any  individual  can  break. 


SEC.   III.]  LEGISLATION.  49 

BRASS  V.  XOETH  DAKOTA. 

153  U.  S.  391.     1894.1 

Mr.  Justice  Shiras  delivered  the  opinion  of  the  court. 

The  legislature  of  the  State  of  North  Dakota,  by  an  act  ap- 
proved March  7,  1891,  c.  126,  Laws  of  1891,  p.  321,  and  entitled 
*'  An  act  to  regulate  grain  warehouses  and  the  weighing  and  handling 
of  grain,  and  defining  the  duties  of  the  railroad  commissioners  in 
relation  thereto,"  enacted,  in  the  fourth  section  thereof,  that  "  all 
buildings,  elevators,  or  warehouses  in  this  State,  erected  and  oper- 
ated, or  which  may  hereafter  be  erected  and  operated  by  any  per- 
son or  persons,  association,  copartnership,  corporation,  or  trust, 
for  the  purpose  of  buying,  selling,  storing,  shipping,  or  handling 
grain  for  profit,  are  hereby  declared  public  warehouses,  and  the  per- 
son or  persons,  association,  copartnership,  or  trust  owning  or  operat- 
ing said  building  or  buildings,  elevator  or  elevators,  warehouse 
or  warehouses,  which  are  now  or  may  hereafter  be  located  or  doing 
business  within  this  State,  as  above  described,  whether  said  owners 
or  operators  reside  within  this  State  or  not,  are  public  warehouse- 
men within  the  meaning  of  this  act,  and  none  of  the  provisions  of 
this  act  shall  be  construed  so  as  to  permit  discrimination  with 
reference  to  the  buying,  receiving,  and  handling  of  grain  of 
standard  grades,  or  in  regard  to  parties  offering  such  grain  for  sale, 
storage,  or  handling  at  such  public  warehouses,  while  the  same  are 
in  operation ;  "  and  in  the  fifth  section,  "  that  the  proprietor,  lessee, 
or  manager  of  any  public  warehouse  or  elevator  in  this  State  shall 

"  The  paternal  theory  of  government  is  to  me  odious.  The  utmost  pos- 
sible liberty  to  the  individual,  and  the  fullest  possible  protection  to  him  and 
his  propertv,  is  both  the  limitation  and  duty  of  government.  If  it  may  regu- 
late the  price  of  one  service,  which  is  not  a  public  service,  or  the  compen- 
sation for  the  use  of  one  kind  of  property  which  is  not  devoted  to  a  public 
use,  why  may  it  not  with  equal  reason  regulate  the  price  of  all  service, 
and  the  compensation  to  be  paid  for  the  use  ^of  all  property?  And  if  so, 
*  Looking  Backward  '  is  nearer  than  a  dream." 

"  But,  as  I  said.  I  do  not  care  to  enter  into  any  extended  discussion  of 
the  matter.  I  believe  the  time  is  not  distant  when  the  evils  resulting  from 
this  assumption  of-  a  power  on  the  part  of  government  to  determine  the 
compensation  a  man  may  receive  for  the  use  of  his  property,  or  the  per- 
formance of  his  personal  services,  will  become  so  apparent  that  the  courts 
will  hasten  to  declare  that  government  can  prescribe  compensation  only 
when  it  grants  a  special  privilege,  as  in  the  creation  of  a  corporation,  or 
when  the  service  which  is  rendered  is  a  public  service,  or  the  property  is 
in  fact  devoted  to  a  public  use.  .      . ,  . 

"  Mr.  Justice  Field  and  Mr.  Justice  Browx  concur  with  me  in  this 
dissent." 

iThe  statement  of  facts,  as  given  in  the  report,  is  not  here  reprinted, 
and  parts  of  the  opinions  of  Mr.  Justice  Shiras  and  Mr.  Justice  Breweb 
are  omitted. —  Ed. 


50  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

file  with  the  railroad  commissioners  of  the  State  a  bond  to  the 
State  of  North  Dakota,  with  good  and  sufficient  sureties,  to  be 
approved  by  said  commissioners  of  railroads,  in  the  penal  sum 
of  not  less  than  $5000  nor  more  than  $75,000,  in  the  discretion  of 
said  commissioners,  conditioned  for  the  faithful  performance  of 
duty  as  public  warehousemen,  and  a  compliance  with  all  the  laws 
of  the  State  in  relation  thereto ; "  and  in  the  eleventh  section 
thereof,  "  the  charges  for  storing  and  handling  of  grain  shall  not 
be  greater  than  the  following  schedule:  For  receiving,  elevating, 
insuring,  delivering,  and  twenty  days'  storage,  two  cents  per  bushel. 
Storage  rates,  after  tlie  first  twenty  days,  one-half  cent  for  each 
fifteen  days  or  fraction  thereof,  and  shall  not  exceed  five  cents  for 
six  months.  The  grain  shall  be  kept  insured  at  the  ^expense  of  the 
warehousemen  for  the  benefit  of  the  owner ; "  and  by  the  twelfth 
section  it  is  provided  that  "  any  person,  firm,  or  association,  or  any 
representative  thereof,  who  shall  fail  to  do  and  keep  the  require- 
ments as  herein  provided,  shall  be  deemed  guilty  of  a  misdemeanor, 
and  shall,  on  conviction  thereof,  be  subject  to  a  fine  of  not  less  than 
two  hundred  dollars  nor  more  than  one  thousand  dollars,  and  be 
liable  in  addition  thereto  to  imprisonment  for  not  more  than  one 
year  in  the  state  penitentiary,  at  the  discretion  of  the  court." 

In  October,  1891,  in  the  District  Court  of  the  Second  Judicial 
District  of  the  State  of  North  Dakota,  in  proceedings  the  nature 
of  which  sufficiently  appears  in  the  previous  statement  of  facts,^ 

2  Brass  owned  and  operated  a  grain  elevator  in  the  village  of  Grand 
Harbor,  North  Dakota,  and  Stoeser  owned  a  farm  adjoining  the  village, 
on  which  in  the  year  1891  he  raised  about  4,000  bushels  of  wheat.  On 
September  .30,  1891,  Stoeser  applied  to  store  a  part  of  his  wheat-crop  for 
the  compensation  fixed  by  the  statute,  which  Brass  refused  to  accept  for 
storage  unless  paid  therefor  at  a  rate  in  excess  of  that  fixed  by  the  statute. 
Upon  this  refusal  Stoesser  filed  in  the  District  Court  of  Ramsay  County, 
North  Dakota,  a  petition  for  an  alternative  writ  of  mandamus.  This  was 
granted.  To  this  writ  Brass  made  return  by  answer,  admitting  the  truth 
of  the  facts  pleaded,  but  setting  forth  that  in  North  Dakota  there  are  about 
six  hundred  grain  elevators  operated  by  about  one  hundred  and  twenty-five 
independent  owners ;  that  there  are  from  two  to  ten  such  elevators  at  every 
station  in  the  State  from  which  gi'ain  is  shipped,  and  that  property  suit- 
able for  such  elevators  is  unlimited  and  easily  procurable ;  that  at  Grand 
Harbor  there  are  three  grain  elevators  independently  owned  and  operated ; 
that  defendant's  elevator  is  small,  having  a  capacity  of  about  30,000  bushels ; 
that  defendant's  main  business  is  that  of  buying  and  selling  grain,,  to  which 
storing  is  a  mere  incident ;  that  in  some  seasons  there  is  space  in  defend- 
ant's elevator  in  excess  of  that  used  for  defendant's  grain,  but  that  at 
other  times  defendant's  elevator  is  not  large  enough  to  hoid  all  of  his 
own  grain  ;  that  to  compel  defendant  to  store  grain  for  all  applicants  would 
ruin  his  own  business ;  that  defendant  refused  to  comply  with  the  statute 
of  North  Dakota  because  it  deprived  him  of  his  liberty  and  property  with- 
out due  process  of  law,  and  denies  to  him  the  equal  protection  of  the  laws, 
and  amounts  to  a  regulation  of  commerce  among  the  States.  To  this  return 
Stoeser  interposed  a  general  demurrer,  which  was  sustained,  and  Brass 
electing  in  open  court  to  stand  on  his  return,  a  peremptory  writ  of  mandamu.s 
was  allowed.  From  this  judgment  an  appeal  was  taken  to  the  Supreme 
Court  of  North  Dakota,  which  court  affirmed  the  order  and  judgment  of 
the  District  Court. —  Ed. 


SEC.   III.]  LEGISLATIOlSr.  51 

the  validity  of  this  statute  was  sustained,  and  the  judgment  of 
that  court  was,  on  error,  duly  affirmed  by  the  Supreme  Court  of 
the  State.     Brass  v.  Xorth  Dakota,  53  N.  W.  Rep.  408. 

In  the  cases  thus  brought  to  this  court  from  the  States  of  Illinois 
and  New  York,  we  were  asked  to  declare  void  statutes  regulating 
the  affairs  of  grain  warehouses  and  elevators  within  those  States, 
and  held  valid  by  their  highest  courts,  because  it  was  claimed  that 
such  legislation  was  repugnant  to  that  clause  of  the  eighth  section 
of  article  1  of  the  Constitution  of  the  United  States,  which  confers 
upon  Congress  power  to  regulate  commerce  with  foreign  nations  and 
among  the  several  States,  and  to  the  Fourteenth  Amendment,  which 
ordains  that  no  State  shall  deprive  any  person  of  life,  liberty,  or 
property  without  due  process  of  law,  nor  deny  to  any  person  within 
its  jurisdiction  the  equal  protection  of  the  laws. 

In  the  case  now  before  us  the  same  contentions  are  made,  but 
we  are  not  asked  to  review  our  decisions  made  in  the  previous 
cases.  Indeed,  their  soundness  is  tacitly  admitted  in  the  briefs  and 
argument  of  the  counsel  of  the  plaintiff  in  error.  But  it  is  said 
that  those  cases  arose  out  of  facts  so  peculiar  and  exceptional,  and 
so  different  from  those  of  the  present  case,  as  to  render  the  reason- 
ing there  used,  and  the  conclusions  reached,  now  inapplicable. 

The  concession,  then,  is  that,  upon  the  facts  found  to  exist 
by  the  legislatures  of  Illinois  and  New  York,  their  enactments 
were  by  the  courts  properly  declared  valid,  and  the  contention  is 
that  the  facts  upon  which  the  legislature  of  North  Dakota  pro- 
ceeded, and  of  which  we  can  take  notice  in  the  present  case,  are  so 
different  as  to  call  for  the  application  of  other  principles,  and 
to  render  an  opposite  conclusion  necessary. 

The  differences  in  the  facts  of  the  respective  cases,  to  which 
we  are  pointed,  are  mainly  as  follows:  In  the  first  place,  what 
may  be  called  a  geographical  difference  is  suggested,  in  that  the 
operation  of  the  Illinois  and  New  York  statutes  is  said  to  be 
restricted  to  the  city  of  Chicago  in  the  one  case,  and  to  the  cities 
of  Buffalo,  New  York,  and  Brooklyn  in  the  other,  while  the  North 
Dakota  statute  is  applicable  to  the  territory  of  the  entire  State. 

It  is,  indeed,  true  that  while  the  terms  of  the  Illinois  and  New 
York  statutes  embrace  in  both  cases  the  entire  State,  yet  their 
behests  are  restricted  to  cities  having  not  less  than  a  prescribed 
number  of  inhabitants,  and  that  there  is  no  such  restriction  in 
the  North  Dakota  law. 

Upon  this  it  is  argued  that  the  statutes  of  Illinois  and  New 
York  are  intended  to  operate  in  great  trade  centres,  where,  on 
account  of  the  business  being  localized  in  the  hands  of  a  few  persons 
in  close  proximity  to  each  other,  great  opportunities  for  combina- 


52  BASES   OF  PUBLIC   SERVICE  DUTIES.  [CHAP.   I. 

tions  to  raise  and  control  elevating  and  storage  charges  are  afforded, 
while  the  wide  extent  of  the  State  of  North  Dakota  and  the  small 
population  of  its  country  towns  and  villages  are  said  to  present 
no  such  opportunities. 

The  considerations  mentioned  are  obviously  addressed  to  the 
legislative  discretion.  It  can  scarcely  be  meant  to  contend  that 
the  statutes  of  Illinois  and  New  York,  valid  in  their  present  form, 
would  become  illegal  if  the  law  makers  thought  fit  to  repeal  the 
clauses  limiting  their  operation  to  cities  of  a  certain  size,  or  that 
the  statute  of  North  Dakota  would  at  once  be  validated  if  one 
or  more  of  her  towns  were  to  reach  a  population  of  one  hundred 
thousand,  and  her  legislature  were  to  restrict  the  operation  of 
the  statute  to  such  cities. 

Again,  it  is  said  that  the  modes  of  carrying  on  the  business  of 
elevating  and  storing  grain  in  North  Dakota  are  not  similar  to 
those  pursued  in  the  Eastern  cities;  that  the  great  elevators  used 
in  transshipping  grain  from  the  Lakes  to  the  railroads  are  essential ; 
and  that  those  who  own  them,  if  uncontrolled  by  law,  could  extort 
such  charges  as  they  pleased;  and  great  stress  is  laid  upon  ex- 
pressions used  in  our  previous  opinions,  in  which  this  business, 
as  carried  on  at  Chicago  and  Buffalo,  is  spoken  of  as  a  practical 
monopoly,  to  which  shippers  and  owners  of  grain  are  compelled 
to  resort.  The  surroundings  in  an  agricultural  State,  where  land 
is  cheap  in  price  and  limitless  in  quantity,  are  thought  to  be  widely 
different,  and  to  demand  different  regulations. 

These  arguments  are  disposed  of,  as  we  think,  by  the  simple 
observation,  already  made,  that  the  facts  rehearsed  are  matters 
for  those  who  make,  not  for  those  who  interpret,  the  laws.  A^Hien 
it  is  once  admitted,  as  it  is  admitted  here,  that  it  is  competent 
for  the  legislative  power  to  control  the  business  of  elevating  and 
storing  grain,  whether  carried  on  by  individuals  or  associations,  in 
cities  of  one  size  and  in  some  circumstances,  it  follows  that  such 
power  may  be  legally  exerted  over  the  same  business  when  carried 
on  in  smaller  cities  and  in  other  circumstances.  It  may  be  con- 
ceded that  that  would  not  be  wise  legislation  which  provided  the 
same  regulations  in  every  case,  and  overlooked  differences  in  the 
facts  that  called  for  regulations.  But,  as  we  have  no  right  to 
revise  the  wisdom  or  expediency  of  the  law  in  question,  so  we 
would  not  be  justified  in  imputing  an  improper  exercise  of  discretion 
to  the  legislature  of  North  Dakota.  It  may  be  true  that,  in  the 
cases  cited,  the  judges  who  expressed  the  conclusions  of  the  court 
entered,  at  some  length,  into  a  defence  of  the  propriety  of  the  laws 
which  they  were  considering,  and  that  some  of  the  reasons  given 
for  sustaining  them  went  rather  to  their  expediency  than  to  their 


SEC.    III.]  LEGISLATION.  53 

validity.  Such  efforts,  on  the  part  of  judges,  to  justify  to  citizens 
the  ways  of  legislatures  are  not  without  value,  though  they  are 
liable  to  be  met  by  the  assertion  of  opposite  views  as  to  the  practical 
wisdom  of  the  law,  and  thus  the  real  question  at  issue,  namely,  the 
power  of  the  legislature  to  act  at  all,  is  obscured.  Still,  in  the 
present  instance,  the  obvious  aim  of  the  reasoning  that  prevailed 
was  to  show  that  the  subject-matter  of  these  enactments  fell  within 
the  legitimate  sphere  of  legislative  power,  and  that,  so  far  as  the 
laws  and  Constitution  of  the  United  States  were  concerned,  the 
legislation  in  question  deprived  no  person  of  his  property  without 
due  process  of  law,  and  did  not  interfere  with  Federal  jurisdiction 
over  interstate  commerce. 

Another  argument  advanced  is  based  on  the  admitted  allegation 
that  the  principal  business  of  the  plaintiff  in  error,  in  connection 
with  his  warehouse,  is  in  storing  his  own  grain,  and  that  the  storage 
of  the  grain  of  other  persons  is  and  always  has  been  a  mere  inci- 
dent, and  it  is  said  that  the  effect  of  this  law  will  be  to  compel  him 
to  renounce  his  principal  business  and  become  a  mere  warehouse- 
man for  others.  We  do  not  understand  this  law  to  require  the  owner 
of  a  warehouse,  built  and  used  by  him  only  to  store  his  own  grain, 
to  receive  and  store  the  grain  of  others.  Such  a  duty  only  arises 
when  he  chooses  to  enter  upon  the  business  of  elevating  and 
storing  the  grain  of  other  persons  for  profit.  Then  he  becomes 
subject  to  the  statutory  regulations,  and  he  cannot  escape  them  by 
asserting  that  he  also  elevates  and  stores  his  own  grain  in  the 
same  warehouse.  As  well  might  a  person  accused  of  selling  liquor 
without  a  license  urge  that  the  larger  part  of  his  liquors  were  de- 
signed for  his  own  consumption,  and  that  he  only  sold  the  surplus 
as  a  mere  incident. 

Another  objection  to  the  law  is  found  in  its  provision  that  the 
warehouseman  shall  insure  the  grain  of  others  at  his  own  expense. 
This  may  be  burdensome,  but  it  affects  alike  all  engaged  in  the 
business,  and,  if  it  be  regarded  as  contrary  to  sound  public  policy, 
those  affected  must  instruct  their  representatives  in  general  assembly 
met  to  provide  a  remedy. 

The  plaintiff  in  error,  in  his  answer  to  the  write  of  mandamus, 
based  his  defence  wholly  upon  grounds  arising  under  the  constitu- 
tion of  the  State  and  of  the  United  States.  We  are  limited  by  this 
record  to  the  questions  whether  the  legislature  of  North  Dakota, 
in  regulating  by  a  general  law  the  business  and  charges  of  public 
warehousemen  engaged  in  elevating  and  storing  grain  for  profit, 
denies  to  the  plaintiff  in  error  the  equal  protection  of  the  laws  or 
deprives  him  of  his  property  without  due  process  of  law,  and  whether 
such  statutory  regulations  amount  to  a  regulation  of  commerce  be- 


54  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

tween  the  States.  The  allegations  and  arguments  of  the  plaintiff 
in  error  have  failed  to  satisfy  us  that  any  solid  distinction  can  be 
found  between  the  cases  in  which  those  questions  have  been  here- 
tofore determined  by  this  court  and  the  present  one.  The  judg- 
ment of  the  court  below  is  accordingly  Affirmed. 

Mr.  Justice  Brewer,  with  whom  concurred  Mr.  Justice  Field, 
Mr.  Justice  Jackson,  and  Mr.  Justice  White,  dissenting. 

I  dissent  from  the  opinion  and  judgment  of  the  court  in  this 
case.  Eeliance  is  placed  in  that  opinion  on  Munn  v.  Illinois,  94 
IJ.  S.  113,  and  Budd  v.  New  York,  143  U.  S.  517.  In  the  dissent- 
ing opinion  I  filed  in  the  latter  case,  I  expressed,  so  far  as  was 
necessary,  my  views  in  reference  to  the  general  propositions  laid 
down  in  the  two  cases,  and  I  do  not  desire  to  repeat  what  I  there 
said.  It  is  a  significant  fact  that  in  Sinking  Fund  Cases,  99  U.  S. 
700,  747,  and  in  Wabash,  St.  Louis  &  Pacific  Railway  v.  Illinois, 
118  U.  S.  557,  569,  Mr.  Justice  Bradley  and  Mr.  Justice  Miller, 
who  concurred  in  the  judgment  in  Munn  v.  Illinois,  each  sought 
to  limit  and  qualify  the  scope  of  the  language  used  by  the  Chief 
Justice  in  that  case.     These  are  the  words  of  Mr.  Justice  Bradley: 

"  The  inquiry  there  was  as  to  the  extent  of  the  police  power 
in  cases  where  the  public  interest  is  affected;  and  we  held  that 
when  an  employment  or  business  becomes  a  matter  of  such  public 
interest  and  importance  as  to  create  a  common  charge  or  burden 
upon  the  citizen;  in  other  words,  when  it  becomes  a  practical 
monopoly,  to  which  the  citizen  is  compelled  to  resort,  and  by  means 
of  which  a  tribute  can  be  exacted  from  the  community,  it  is  subject 
to  regulation  by  the  legislative  power." 

And  this  is  the  language  of  Mr.  Justice  Miller,  delivering  the 
opinion  of  the  court: 

"  And  in  that  case  the  court  was  presented  with  the  question, 
which  it  decided,  whether  any  one  engaged  in  a  public  business,  in 
which  all  the  public  had  a  right  to  require  his  service,  could  be 
regulated  by  acts  of  the  legislature  in  the  exercise  of  this  public 
function  and  public  duty,  so  far  as  to  limit  the  amount  of  charges 
that  should  be  made  for  such  services." 

It  appears  from  these  admissions  tliat  the  principal  business 
of  defendant  was  that  of  buying  wheat  and  shipping  it  to  Minneap- 
olis and  Duluth  for  sale,  and  that  he  operated  and  maintained  his 
elevator  for  the  exclusive  purpose  of  purchasing  grain  to  fill  his 
contracts;  and  wliile  at  the  time  the  elevator  was  not  full  and  there 
was  room  for  the  storage  of  the  grain  tendered  by  the  petitioner, 
and  the  defendant  had  at  times  used  vacant  space  in  his  elevator  for 


SEC.    III.]  LEGISLATION".  55 

the  storage  of  grain  of  others,  yet  such  use  was  a  mere  incident  to 
and  subordinate  to  his  principal  business  of  buying  and  selling 
grain,  for  which  principal  business  he  exclusively  maintained  and 
operated  his  elevator. 

Now,  my  first  objection  is  that  by  this  decision  a  party  is  com- 
pelled by  the  mandate  of  the  court  to  engage  in  a  business  which 
he  never  intended  to  engage  in,  and  which  he  does  not  desire  to  en- 
gage in,  to  wit,  the  business  of  maintaining  a  public  elevator.  His 
business  is  that  of  buying  and  selling  grain,  and  he  operates  and 
maintains  the  elevator,  which  he  owns,  for  the  exclusive  purpose  of 
carrying  on  that  business.  That  he  may  have  sometimes  accom- 
modated his  neighbors  by  the  use  of  his  elevator  for  the  storage  of 
their  grain,  and  thus  to  a  limited  extent  engaged  in  that  business, 
does  not  change  the  fact,  as  admitted,  that  his  principal  business  was 
that  of  buying  and  selling,  and  that  he  operated  and  maintained  that 
elevator  exclusively  for  the  carrying  on  of  that  business,  or  the 
other  admitted  fact  that,  if  he  is  compelled,  as  he  is  compelled  by 
this  mandate,  to  receive  grain  as  tendered  so  long  as  he  has  storage 
capacity  unoccupied  in  his  elevator,  his  principal  business  and  that 
for  which  he  built  the  elevator  will  be  utterly  ruined  and  destroyed. 

The  question  is  not  whether,  if  he  should  receive  and  store  in 
his  elevator  grain  for  others,  he  might  not  so  far  bring  himself 
within  the  scope  of  the  law  as  to  be  deemed  for  that  transaction 
engaged  in  the  business  of  maintaining  a  public  elevator,  and  thus 
bound  by  the  charges  fixed  by  statute ;  but  whether,  when  he  main- 
tains an  elevator  exclusively  for  his  own  business,  the  fact  that  at 
times  he  has  used  vacant  room  in  it  for  the  storage  of  the  grain  of 
other  persons,  compels  him  to  receive  grain  when  tendered  irre- 
spective of  the  injury  which  it  does  to  his  own  business.  And  it  is 
admitted  that,  at  the  time  of  this  tender,  there  was  not  sufficient 
storage  capacity  in  his  elevator  to  hold  and  store  the  grain  pur- 
chased by  him  in  the  conduct  of  his  business.  And  this  is  a 
matter  of  no  trifling  moment  to  one  engaged  in  the  business  of 
buying  and  selling  grain.  He  cannot  know  in  advance  when  grain 
will  be  tendered  at  a  price  which  will  justify  his  purchase  with 
a  view  to  profit.  The  fact  that  to-day  there  may  be  storage 
capacity  does  not  prove  that  to-morrow  he  may  not  need  the  entire 
capacity  of  his  elevator.  And  yet,  if,  because  to-day  there  is  room 
in  his  elevator,  he  is  bound  to  receive  any  grain  that  shall  be 
tendered,  he  may  to-morrow  be  unable  to  make  purchase  of  the  of- 
fered grain.  It  is  a  matter  of  common  knowledge  that  grain  is 
not  put  into  and  taken  out  of  an  elevator  in  an  instant.  And  if 
once  deposited  the  owner  cannot  be  compelled  to  remove  it,  merely 
for  the  accommodation  of  the  wareliouseman,  but  may  leave  it  there 


56  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

indefinitely  so  long  as  lie  pays  the  legal  charges.  The  petition  was 
for  a  writ  of  mandamus  commanding  the  defendant  "  so  long  as  the 
capacity  of  his  said  elevator  is  sufficient  for  the  purpose,  to  store 
such  grain  as  may  be  tendered  to  him  by  the  relator,"  and  the  de- 
cree of  the  court  was  that  the  "  writ  issue  as  prayed  for,"  and  that 
is  the  decision  which  is  affirmed  by  this  court. 

I  dissent  in  the  second  place  because  the  facts  show,  in  the 
words  of  Mr.  Justice  Bradley,  no  "  practical  monopoly,  to  which  the 
citizen  is  compelled  to  resort,  and  by  means  of  which  a  tribute  can 
he  exacted  from  the  community."  Along  the  line  of  this  single 
road  within  the  limits  of  this  State  there  are  about  six  hundred 
of  these  elevators,  owned  and  operated  by  over  one  hundred  and 
twenty-five  difllerent  persons,  varying  in  cost  of  construction  from 
$500  to  $5000;  at  every  station  there  is  land  purchasable  by  any 
one  at  prices  varying  from  $1.25  to  $40  per  acre,  and  a  granary 
sufficient  to  store  the  average  product  of  an  ordinary  Dakota  farm 
can  be  erected  at  a  cost  of  not  exceeding  $150.  So  it  is  that  when 
any  farmer  or  other  individual  can  at  a  cost  of  less  than  $200 
provide  himself  with  all  the  facilities  for  storing  and  shipping 
the  entire  product  of  an  ordinary  farm,  when  along  the  line  of  a 
single  railroad  there  are  six  hundred  elevators  already  constructed, 
owned,  and  operated  by  one  hundred  and  twenty-five  different  per- 
sons, when  at  every  station  at  which  grain  is  marketed  there  are  from 
two  to  ten  such  elevators,  it  is  held  that  there  exists  a  monopoly  such 
as  justifies  control  by  the  public  of  the  prices  at  which  grain  shall 
be  stored  in  any  one  of  these  many  elevators.  If  this  be  a  monop- 
oly, justifying  public  control  of  prices  for  service,  I  am  at  a  loss 
to  perceive  at  what  point  the  fact  of  monopoly  will  cease  and 
freedom  of  business  commence.  For  obviously  elevators  along  the 
line  of  that  road  were  as  plentiful  as  other  institutions  of  industry, 
and  as  easily  and  cheaply  constructed,  and  therefore  savoring  no 
more  of  monopoly. 

I  dissent  in  the  third  place  because  by  this  law  the  elevator  man 
is  bound  not  merely  to  receive,  store,  and  discharge  the  grain 
which  is  tendered  to  him,  but  also  to  insure  and  pay  the  cost  of 
insurance,  it  matters  not  what  that  cost  may  be,  whether  more  or 
less  than  he  receives  for  the  whole  service.  I  do  not  care  to  en- 
large upon  this  matter.  If  tlie  legislature  can  compel  a  party, 
though  confessedly  to  the  disadvantage,  injury,  and  even  destruc- 
tion of  his  own  special  business  of  buying  and  selling  grain,  to  re- 
ceive and  store  grain  for  whoever  may  demand  it  in  an  elevator 
which  he  is  maintaining  and  operating  for  the  exclusive  carrying 
on  of  his  own  business  at  any  price  which  it  sees  fit  to  allow,  and 
at  the  same  time  compel  him  to  advance  the  money  to  insure  the 


SEC.   III.]  LEGISLATION".  57 

property  thus  forced  upon  him,  I  can  only  say  that  it  seems  to  me 
that  the  country  is  rapidly  travelling  the  road  which  leads  to  that 
point  where  all  freedom  of  contract  and  conduct  will  he  lost.  For 
these  reasons,  thus  briefly  stated,  I  am  constrained  to  dissent  from 
this  opinion  and  judgment. 

I  am  authorized  to  say  that  Mr.  Justice  Field,  Mr.  Justice 
Jackson,  and  Mr.  Justice  White  concur  in  this  dissent.^ 


GERMAN  ALLIANCE  IXSURANCE  CO.  v.  LEWIS. 

233  U.  S.  389.     1914.^ 

Mr.  Justice  McKenna  delivered  the  opinion  of  the  court. 

We  may  put  aside,  therefore,  all  merely  adventitious  considerations 
and  come  to  the  bare  and  essential  one,  whether  a  contract  of  fire 
insurance  is  private  and  as  such  has  constitutional  immunity  from 
regulation.  Or,  to  state  it  differently  and  to  express  an  antithetical 
proposition,  is  the  business  of  insurance  so  far  affected  with  a 
public  interest  as  to  justify  legislative  regidation  of  its  rates? 
And  we  mean  a  broad  and  definite  public  interest.  In  some  de- 
gree the  public  interest  is  concerned  in  every  transaction  between 
men,  the  sum  of  the  transactions  constituting  the  activities  of  life. 
But  there  is  something  more  special  than  this,  something  of  more 
definite  consequence,  which  makes  the  public  interest  that  justifies 
regulatory  legislation.  We  can  best  explain  by  examples.  The 
transportation  of  property  —  business  of  common  carriers  —  is  ob- 
viously of  public  concern  and  its  regulation  is  an  accepted  govern- 
mental power.  The  transmission  of  intelligence  is  of  cognate  char- 
acter. There  are  other  utilities  which  are  denominated  public,  such 
as  the  furnishing  of  water  and  light,  including  in  the  latter  gas 
and  electricity.  We  do  not  hesitate  at  their  regidation  nor  at  the 
fixing  of  the  prices  which  may  be  charged  for  their  service.     The 

3  Statutory  regulation  of  stockyard  charges  has  been  held  to  be  consti- 
tutional. Ratclife  r.  Wichita  Union  Stockyard  Co.  (190()).  74  Kan.  1. 
where  the  Court  said  in  part :  "  The  operation  of  stockyards  has  more  of 
the  characteristics  of  a  public  business  than  the  carrying  on  of  an  elevator 
or  a  warehouse.  It  possesses  the  market  features,  including  considerations 
of  sanitation  and  health,  and  it  also  has  more  of  the  monopolistic  feature^;. 
.  .  .  The  company  has  ...  a  practical  monopoly  of  a  vast  business,  affect- 
ing thousands  of  people  who  are  almost  obliged  to  deal  at  that  market  and 
at  the  rates  which  the  company  may  choose  to  charge."  See  also  the  opin- 
ion of  Mr.  .Justice  Brewer  in  Cotting  v.  Kansas  City  Stockyards  and  the 
State  of  Kansas   (1901).  183  U.  S.  79. 

Statutory  regulation  of  the  charges  of  tobacco  warehouses  has  also  been 
held  to  be  constitutional.  Connell  v.  Louisville  Tobacco  Warehouse  Co. 
(1902),  113  Ky.  630. 

1  The  statement  of  facts,  and  parts  of  Mr.  Justice  McKenna's  opinion 
are  omitted. —  Ed. 


58  BASES    OF    PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

basis  of  the  ready  concession  of  the  power  of  regulation  is  the 
public  interest.  This  is  not  denied,  but  its  application  to  insur- 
ance is  so  far  denied  as  not  to  extend  to  the  fixing  of  rates.  It  is 
said,  the  State  has  no  power  to  fix  the  rates  charged  to  the  public 
by  either  corporations  or  individuals  engaged  in  a  private  business, 
and  the  "  test  of  whether  the  use  is  public  or  not  is  whether  a 
public  trust  is  imposed  upon  the  property  and  whether  the  public 
has  a  legal  right  to  the  use  which  cannot  be  denied ; "  or,  as  we 
have  said,  quoting  counsel,  "  Where  the  right  to  demand  and  re- 
ceive service  does  not  exist  in  the  public,  the  correlative  right  of 
regulation  as  to  rates  and  charges  does  not  exist."  Cases  are  cited 
which,  it  must  be  admitted,  support  the  contention.  The  dis- 
tinction is  artificial.  It  is,  indeed,  but  the  assertion  that  the  cited 
examples  embrace  all  cases  of  public  interest.  The  complainant 
explicitly  so  contends,  urging  that  the  test  it  applies  excludes  the 
idea  that  there  can  be  a  public  interest  which  gives  the  power  of 
regulation  as  distinct  from  a  public  use  which,  necessarily,  it  is  con- 
tended, can  only  apply  to  property,  not  to  personal  contracts.  The 
distinction,  we  think,  has  no  basis  in  principle  (Noble  State  Bank 
V.  Haskell,  219  U.  S.  104),  nor  has  the  other  contention  that  the 
service  which  cannot  be  demanded  cannot  be  regulated. 

Munn  V.  Illinois,  94  U.  S.  113,  is  an  instructive  example  of 
legislative  power  exerted  in  the  public  interest.  The  constitution 
of  Illinois  declared  all  elevators  or  storehouses,  where  grain  or 
other  property  was  stored  for  a  compensation,  to  be  public  ware- 
houses, and  a  law  was  subsequently  enacted  fixing  rates  of  storage. 
In  other  words,  that  which  had  been  private  property  had  from  its 
uses  become,  it  was  declared,  of  public  concern  and  the  compensa- 
tion to  be  charged  for  its  use  prescribed.  The  law  was  sustained 
against  the  contention  that  it  deprived  the  owners  of  the  ware- 
houses of  their  property  without  due  process  of  law.  We  can  only 
cite  the  case  and  state  its  principle,  not  review  it  at  any  length. 
The  principle  was  expressed  to  be,  quoting  Lord  Chief  Justice 
Hale,  "  that  when  private  property  is  '  affected  with  a  public  inter- 
est it  ceases  to  be  juris  privati '  only  "  and  it  becomes  "  clothed  with 
a  public  interest  when  used  in  a  manner  to  make  it  of  public  conse- 
quence, and  affect  the  community  at  large  " ;  and,  so  using  it,  the 
owner  "  grants  to  the  public  an  interest  in  that  use,  and  must  sub- 
mit to  be  controlled  by  the  public  for  the  common  good."  And  it 
was  said  that  the  application  of  tbe  principle  could  not  be  denied 
because  no  precedent  could  be  found  for  a  statute  precisely  like  the 
one  reviewed.  It  presented  a  case,  the  court  further  said,  "  for  the 
application  of  a  long-known  and  well-established  principle  in  social 
science,  and  this  statute  simply  extends  the  law  so  as  to  meet  this 


SEC.   III.]  LEGISLATION.  59 

new  development  of  commercial  progress."  The  principle  was  ex- 
pressed as  to  property,  and  the  instance  of  its  application  was  to 
property,  but  it  is  manifestly  broader  than  that  instance.  It  is 
the  business  that  is  the  fundamental  thing;  property  is  but  its  in- 
strument, the  means  of  rendering  the  service  which  has  become  of 
public  interest. 

Munn  V.  Illinois  was  approved  in  many  state  decisions,  but  it  was 
brought  to  the  review  of  this  court  in  Budd  v.  New  York,  143  U.  S. 
517,  and  its  doctrine,  after  elaborate  consideration,  re-affirmed,  and 
against  the  same  arguments  which  are  now  urged  against  the 
Kansas  statute.  Nowhere  have  these  arguments  been,  or  could  be, 
advanced  with  greater  strength  and  felicity  of  expression  than  in 
the  dissenting  opinion  of  Mr.  Justice  Brewer.  Every  consider- 
ation was  adduced,  based  on  the  private  character  of  the  business 
regulated  and,  for  that  reason,  its  constitutional  immunity  from 
regulation,  with  all.  the  power  of  argument  and  illustration  of  which 
that  great  judge  was  a  master.  The  considerations  urged  did  not 
prevail.  Against  them  the  court  opposed  the  ever-existing  police 
power  in  government  and  its  necessary  exercise  for  the  public  good 
and  declared  its  entire  accommodation  to  the  limitations  of  the 
Constitution.  The  court  was  not  deterred  by  the  charge  (repeated 
in  the  case  at  bar)  that  its  decision  had  the  sweeping  and  dangerous 
comprehension  of  subjecting  to  legislative  regulation  all  of  the 
businesses  and  affairs  of  life  and  the  prices  of  all  commodities. 
Whether  we  may  apprehend  such  result  by  extending  the  principle 
of  the  cases  to  fire  insurance  we  shall  presently  consider. 

In  Brass  v.  Stoeser,  153  U.  S.  391,  Munn  v.  Illinois  and  Budd 
V.  New  York  were  affirmed.  A  law  of  the  State  of  North  Da- 
kota was  sustained  which  made  all  buildings,  elevators  and  ware- 
houses used  for  the  handling  of  grain  for  a  profit  public  ware- 
houses, and  fixed  a  storage  rate.  The  case  is  important.  It  ex- 
tended the  principle  of  the  other  two  cases  and  denuded  it  of  the 
limiting  element  which  was  supposed  to  beset  it  —  that  to  justify 
regulation  of  a  business  the  business  must  have  a  monopolistic 
character.  That  distinction  was  pressed  and  answered.  It  was 
argued,  the  court  said  (p.  402),  "that  the  statutes  of  Illinois 
and  New  York  [passed  on  in  the  Munn  and  Budd  Cases]  are  in- 
tended to  operate  in  great  trade  centers,  where,  on  account  of  the 
business  being  localized  in  the  hands  of  a  few  persons  in  close 
proximity  to  each  other,  great  opportunities  for  combinations  to 
raise  and  control  elevating  and  storage  charges  are  afforded,  while 
the  wide  extent  of  the  State  of  North  Dakota  and  the  small  popu- 
lation of  its  country  towns  and  villages  are  said  to  present  no 
such  opportunities."     And  it  was  also  urged  that  the  method  of 


60  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

carrying  on  business  in  North  Dakota  and  the  Eastern  cities  was 
different,  that  the  elevators  in  the  latter  were  essentially  means 
of  transporting  grain  from  the  lakes  to  the  railroads  and  those 
who  owned  them  could,  if  uncontrolled  by  law,  extort  such  charges 
as  they  pleased,  and  stress  was  laid  upon  the  expression  in  the 
other  cases  which  represented  the  business  as  a  practical  monop- 
oly. A  contrast  was  made  between  those  conditions  and  those 
which  existed  in  an  agricultural  State  where  land  was  cheap  and 
limitless  in  quantity.  It  was  replied  that  this  difference  in  con- 
ditions was  "  for  those  who  make,  not  for  those  who  interpret, 
the  laws."  And  considering  the  expressions  in  the  other  cases 
which,  it  was  said,  went  rather  to  the  expediency  of  the  laws, 
than  to  their  validity,  yet,  it  was  further  said,  the  expressions 
had  their  value  because  the  "  obvious  aim  of  the  reasoning  that 
prevailed  was  to  show  that  the  subject-matter  of  these  enactments 
fell  within  the  legitimate  sphere  of  legislative  power,  and  that, 
so  far  as  the  laws  and  Constitution  of  the  United  States  were 
concerned,  the  legislation  in  question  deprived  no  person  of  his 
property  without  due  process  of  law  "(p.  404). 

The  restriction  upon  the  legislative  power  which  complainant 
urges  we  have  discussed,  or  rather  the  considerations  which  take, 
it  is  contended,  the  business  of  insurance  outside  of  the  sphere  of 
the  power.  To  the  contention  that  the  business  is  private  we 
have  opposed  the  conception  of  the  public  interest.  We  have 
shown  that  the  business  of  insurance  has  very  definite  character- 
istics, with  a  reach  of  influence  and  consequence  beyond  and  dif- 
ferent from  that  of  the  ordinary  businesses  of  the  commercial 
world,  to  pursue  which  a  greater  liberty  may  be  asserted.  The 
transactions  of  the  latter  are  independent  and  individual,  termi- 
nating in  their  effect  with  the  instances.  The  contracts  of  insur- 
ance may  be  said  to  be  interdependent.  They  cannot  be  regarded 
singly,  or  isolatedly,  and  the  effect  of  their  relation  is  to  create  a 
fund  of  assurance  and  credit,  the  companies  becoming  the  de- 
positories of  the  money  of  the  insured,  possessing  great  power 
thereby  and  charged  with  great  responsibility.  How  necessary 
their  solvency  is,  is  manifest.  On  the  other  hand  to  the  insured, 
insurance  is  an  asset,  a  basis  of  credit.  It  is  practically  a  neces- 
sity to  business  activity  and  enterprise.  It  is,  therefore,  essentially 
different  from  ordinary  commercial  transactions,  and,  as  we  have 
seen,  according  to  the  sense  of  the  world  from  the  earliest  times 
—  certainly  the  sense  of  the  modern  world  —  is  of  the  greatest 
public  concern.  It  is,  therefore,  within  the  principle  we  have  an- 
nounced. 

But  it  is  said  that  the  reasoning  of  the  opinion  has  the  broad 


SEC.    III.]  LEGISLATION.  61 

reach  of  subjecting  to  regulation  every  act  of  human  endeavor 
and  the  price  of  every  article  of  human  use.  We  might,  without 
much  concern,  leave  our  discussion  to  take  care  of  itself  against 
such  misunderstanding  or  deductions.  The  principle  we  apply  is 
definite  and  old  and  has,  as  we  have  pointed  out,  illustrating  ex- 
amples. And  both  by  the  expression  of  the  principle  and  the 
citation  of  the  examples  we  have  tried  to  confine  our  decision 
to  the  regulation  of  the  business  of  insurance,  it  having  become 
"  clothed  with  a  public  interest,"  and  therefore  subject  "  to  be  con- 
trolled by  the  public  for  the  common  good." 

We  may  venture  to  observe  that  the  price  of  insurance  is  not 
fixed  over  the  counters  of  the  companies  by  what  Adam  Smith 
calls  the  higgling  of  the  market,  but  formed  in  the  councils  of 
the  underwriters,  promulgated  in  schedules  of  practically  con- 
trolling constancy  which  the  applicant  for  insurance  is  powerless 
to  oppose  and  which,  therefore,  has  led  to  the  assertion  that  the 
business  of  insurance  is  of  monopolistic  character  and  that  "  it  is 
illusory  to  speak  of  a  liberty  of  contract."  It  is  in  the  alternative 
presented  of  accepting  the  rates  of  the  companies  or  refraining 
from  insurance,  business  necessity  impelling  if  not  compelling  it, 
that  we  may  discover  the  inducement  of  the  Kansas  statute,  and 
the  problem  presented  is  whether  the  legislature  could  regard  it  of 
as  much  moment  to  the  public  that  they  who  seek  insurance 
should  no  more  be  constrained  by  arbitrary  terms  than  they  who 
seek  transportation  by  railroads,  steam  or  street,  or  by  coaches 
whose  itinerary  may  be  only  a  few  city  blocks,  or  who  seek  the 
use  of  grain  elevators,  or  be  secured  in  a  night's  accommodation  at 
a  wayside  inn,  or  in  the  weight  of  a  five-cent  loaf  of  bread.  We 
do  not  say  this  to  belittle  such  rights  or  to  exaggerate  the  effect  of 
insurance,  but  to  exhibit  the  principle  which  exists  in  all  and 
brings  all  under  the  same  governmental  power. 

We  have  summarized  the  provisions  of  the  Kansas  statute,  and 
it  will  be  observed  from  them  that  they  attempt  to  systematize  the 
control  of  insurance.  The  statute  seeks  to  secure  rates  which  shall 
be  reasonable  both  to  the  insurer  and  the  insured,  and  as  a  means 
to  this  end  it  prescribes  equality  of  charges,  forbids  initial  dis- 
crimination or  subsequently  by  the  refund  of  a  portion  of  the 
rates,  or  the  extension  to  the  insured  of  any  privilege;  to  this  end 
it  requires  publicity  in  the  basic  schedules  and  of  all  the  condi- 
tions which  affect  the  rates  or  the  value  of  the  insurance  to  the 
insured,  and  also  adherence  to  the  rates  as  published.  \Yliether 
the  requirements  are  necessary  to  the  purpose,  or  —  to  confine  our- 
selves to  that  which  is  under  review  —  whether  rate  regulation  is 
necessary  to  the  purpose,  is  a  matter  for  legislative  judgment,  not 


62  BASES   OF    PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

judicial.     Our   function   is   only   to    determine   the   existence   of 
power. ^ 


THE  PIPE  LINE  CASES. 
234  U.  S.  548.     1913.^ 

Six  appeals  from  the  United  States  Commerce  Court  to  review 
decrees  enjoining  the  enforcement  of  an  order  of  the  Interstate 
Commerce  Commission  requiring  parties  in  control  of  oil  pipe  lines 
to  file  with  the  Commission  schedules  of  rates  and  charges  for 
transportation. 

Me.  Justice  Holmes  delivered  the  opinion  of  the  court. 

By  the  act  of  Congress  of  June  29,  1906,  chap.  3591,  31  Stat,  at 
L.  584,  the  Act  to  Kegulate  Commerce  was  amended  so  that  the  1st 
section  reads  in  part  as  follows :  "  That  the  provisions  of  this  Act 
shall  apply  to  any  corporation  or  an}^  person  or  persons  engaged  in 
the  transportation  of  oil  or  other  commodity,  except  water  and  ex- 
cept natural  or  artificial  gas,  by  means  of  pipe  lines,  or  partly  by 
pipe  lines  and  partly  by  railroad,  or  partly  by  pipe  lines  and 
partly  by  water,  who  shall  be  considered  and  held  to  be  common 
carriers  within  the  meaning  and  purpose  of  this  Act."  Thereafter 
the  Interstate  Commerce  Commission  issued  an  order  requiring 
the  appellees,  among  others,  being  parties  in  control  of  pipe  lines, 
to  file  with  the  Commission  schedules  of  their  rates  and  charges 
for  the  transportation  of  oil.  34  Inters.  Com.  Eep.  1.  The 
appellees  thereupon  brought  suit  in  the  Commerce  Court  to  set 

2  Mr.  Justice  Lamar  wrote  a  dissenting  opinion,  concurred  in  by  Mr. 
Chief  Justice  White  and  Mr.  Justice  Van  Devanter.  The  points  par- 
ticularly emphasized  in  the  dissenting  opinion  are  contained  in  the  follow- 
ing sentences : 

"  The  fact  that  insurance  is  a  strictly  private  and  personal  contract  of 
indemnity  puts  it  on  the  extreme  outside  limit,  and  removes  it  as  far  as  any 
business  can  be  from  those  that  are  in  their  nature  public.  So  that  if  the 
price  of  a  private  and  personal  contract  of  indemnity  can  be  regulated  — 
if  the  price  of  a  chose  in  action  can  be  fixed  —  then  the  price  of  everything 
within  the  circle  of  business  transactions  can  be  regulated.  Considering, 
therefore,  the  nature  of  the  subject  treated,  and  the  reasoning  upon  which 
the  court's  opinion  is  based,  it  is  evident  that  the  decision  is  not  a  mere 
entering  wedge,  but  reaches  the  end  from  the  beginning,  and  announces  a 
principle  which  points  inevitably  to  the  conclusion  that  the  price  of  every 
article  sold  and  the  price  of  every  service  offered  can  be  regulated  by  stat- 
ute." 

"  Not  only  does  the  Munn  Case  show  that  the  right  to  fix  prices  depends 
upon  the  concurrence  of  public  interest  and  the  employment  of  property 
devoted  to  a  public  use,  but,  with  the  exception  of  the  Louisiana  Bread 
Case,  Guillote  v.  New  Orleans,  12  La.  Ann.  4;;2,  it  is  believed  that  every 
American  rate  statute,  since  the  requirement  that  property  should  not  be 
taken  without  due  process  of  law,  related  to  a  business  which  was  public 
in  its  character  and  employed  visible  and  tangible  property  which  had  been 
devoted  to  a  public  use." 

1  The  concurring  opinion  of  Mr.  Chief  Justice  White,  and  the  dissent- 
ing opinion  of  Mr.  Justice  McKenna  are  omitted. —  Ed. 


SEC.   III.]  LEGISLATION.  63 

aside  and  annul  the  order,  and  a  preliminary  injunction  was  issued 
by  that  court,  on  the  broad  ground  that  the  statute  applies  to 
every  pipe  line  that  crosses  a  state  boundary,  and  that  thus  con- 
strued it  is  unconstitutional.  204  Fed.  798.  The  United  States, 
the  Interstate  Commerce  Commission,  and  other  intervening  re- 
spondents appealed. 

The  circumstances  in  which  the  amendment  was  passed  are 
known  to  everyone.  The  Standard  Oil  Company,  a  New  Jersey 
corporation,  owned  the  stock  of  the  New  York  Transit  Company, 
a  pipe  line  made  a  common  carrier  by  the  laws  of  New  York,  and  of 
the  National  Transit  Company,  a  Pennsylvania  corporation  of  like 
character,  and  by  these  it  connected  the  Appalachian  oil  field  with 
its  refineries  in  the  east.  It  owned  nearly  all  the  stock  of  the  Ohio 
Oil  Company,  which  connected  the  Lima-Indiana  field  with  its 
system ;  and  the  National  Transit  Compan}',  controlled  by  it,  owned 
nearly  all  the  stock  of  the  Prairie  Oil  &  Gas  Company,  which 
ran  from  the  mid-continent  field  in  Oklahoma  and  Kansas  and 
the  Caddo  field  in  Louisiana  to  Indiana,  and  connected  with  the 
previously  mentioned  lines.  It  also  was  largely  interested  in  the 
Tide  Water  Pipe  Company,  Limited,  which  connected  with  the 
Appalachian  and  other  fields  and  pursued  the  methods  of  the 
Standard  Oil  Company  about  to  be  described.  By  the  before-men- 
tioned and  subordinate  lines  the  Standard  Oil  Company  had  made 
itself  master  of  the  only  practicable  oil  transportation  between  the 
oil  fields  east  of  California  and  the  Atlantic  ocean,  and  carried 
much  the  greater  part  of  the  oil  between  those  points.  Before  the 
recent  dissolution,  the  New  York  and  Pennsylvania  companies  had 
extended  their  lines  into  New  Jersey  and  Maryland  to  the  re- 
fineries, and  the  laws  of  those  states  did  not  require  them  to 
be  common  carriers.  To  meet  the  present  amendment  the  Stand- 
ard Oil  Company  took  a  conveyance  of  the  New  Jersey  and  Mary- 
land lines,  and  the  common  carrier  lines  now  end  at  insignificant 
places  where  there  are  neither  market  nor  appliances  except  those 
of  the  Standard  Oil,  by  which  it  would  seem  that  the  whole  trans- 
port of  the  carriers'  lines  is  received.  There  is  what  seems  to  be 
merely  a  formal  breach  of  continuity  when  the  carriers'  pipes  stop. 
The  change  is  not  material  to  our  view  of  the  case. 

Availing  itself  of  its  monopoly  of  the  means  of  transportation 
the  Standard  Oil  Company  refused,  through  its  subordinates,  to 
carry  any  oil  unless  the  same  was  sold  to  it  or  to  them,  and  through 
them  to  it,  on  terms  more  or  less  dictated  by  itself.  In  this  way 
it  made  itself  master  of  the  fields  without  the  necessity  of  own- 
ing them,  and  carried  across  half  the  continent  a  great  subject  of 
international  commerce  coming  from  many  owners,  but,  by  the 


64'  BASES    OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

duress  of  which  the  Standard  Oil  Company  was  master,  carrying  it 
all  as  its  own.  The  main  question  is  whether  the  act  does  and  con- 
stitutionally can  apply  to  the  several  constituents  that  then  had- 
been  united  into  a  single  line. 

Taking  up  first  the  construction  of  the  statute,  we  think  it 
plain  that  it  was  intended  to  reach  the  combination  of  pipe  lines. 
that  we  have  described.  The  provisions  of  the  act  are  to  apply  to 
any  person  engaged  in  the  transportation  of  oil  by  means  of  pipe 
lines.  The  words  "who  shall  be  considered  and  held  to  be  com- 
mon carriers  within  the  meaning  and  purpose  of  this  act "  ob- 
viously are  not  intended  to  cut  down  the  generality  of  the  previous 
declaration  to  the  meaning  that  only  those  shall  be  held  common 
carriers  within  the  act  who  were  common  carriers  in  a  technical 
sense,  but  an  injunction  that  those  in  control  of  pipe  lines  and 
engaged  in  the  transportation  of  oil  shall  be  dealt  with  as  such. 
If  the  Standard  Oil  Company  and  its  co-operating  companies  were 
not  so  engaged  no  one  was.  It  not  only  would  be  a  sacrifice  of 
fact  to  form,  but  would  empty  the  act  if  the  carriage  to  the  sea- 
board of  nearly  all  the  oil  east  of  California  were  held  not  to  be 
transportation  within  its  meaning,  because  by  the  exercise  of  their 
power  the  carriers  imposed  as  a  condition  to  the  carriage  a  sale  to 
themselves.  As  applied  to  them,  while  the  amendment  does  not 
compel  them  to  continue  in  operation,  it  does  require  them  not  to 
continue  except  as  common  carriers.  That  is  the  plain  meaning, 
as  has  been  held  with  regard  to  other  statutes  similarly  framed. 
Atlantic  Coast  Line  R.  E.  Co.  v.  Riverside  Mills,  219  U.  S.  186,  195, 
203.  Its  evident  purpose  was  to  bring  within  its  scope  pipe  lines 
that,  although  not  technically  common  carriers,  yet  were  carrying 
all  oil  offered,  if  only  the  offerers  would  sell  at  their  price. 

The  only  matter  requiring  much  consideration  is  the  constitu- 
tionality of  the  act.  That  the  transportation  is  commerce  among 
the  states  we  think  clear.  That  conception  cannot  be  made  wholly, 
dependent  upon  technical  questions  of  title,  and  the  fact  that  the 
oils  transported  belonged  to  the  owner  of  the  pipe  line  is  not  con- 
clusive against  the  transportation  being  such  commerce.  Eearick  v. 
Pennsylvania,  203  U.  S.  507,  512.  See  Texas  &  N.  0.  E.  E.  Co.  v, 
Sabine  Tram  Co.  227  U.  S.  111.  The  situation  that  we  have  de- 
scribed would  make  it  illusory  to  deny  the  title  of  commerce  to  such 
transportation,  beginning  in  purchase  and  ending  in  sale,  for  the 
same  reasons  that  make  it  transportation  within  the  act. 

Tbe  control  of  Congress  over  commerce  among  the  states  cannot 
be  made  a  means  of  exercising  powers  not  intrusted  to  it  by  the 
Constitution,  but  it  may  require  those  who  are  common  carriers  in 
substance  to  become  so  in  form.     So  far  as  the  statute  contemplates 


SEC.    III.]  LEGISLATION.  65 

future  pipe  lines  and  prescribes  the  conditions  upon  which  they 
may  be  established  there  can  be  no  doubt  that  it  is  valid.  So  the 
objection  is  narrowed  to  the  fact  that  it  applies  to  lines  already 
engaged  in  transportation.  But,  as  we  already  have  intimated, 
those  lines  that  we  are  considering  are  common  carriers  now  in 
everything  but  form.  They  carry  everybody's  oil  to  a  market,  al- 
though they  compel  outsiders  to  sell  it  before  taking  it  into  their 
pipes.  The  answer  to  their  objection  is  not  that  they  may  give  up 
the  business,  but  that,  as  applied  to  them,  the  statute  practically 
means  no  more  than  they  must  give  up  requiring  a  sale  to  them- 
selves before  carrying  the  oil  that  they  now  receive.  The  whole 
case  is  that  the  appellees,  if  they  carry,  must  do  it  in  a  way  that 
they  do  not  like.  There  is  no  taking  and  it  does  not  become  neces- 
sary to  consider  how  far  Congress  could  subject  them  to  pecuniary 
loss  without  compensation  in  order  to  accomplish  the  end  in  view. 
Hoke  V.  United  States,  237  U.  S.  308,  323;  188  U.  S.  321,  357; 
Lottery  Case,  188  U.  S.  321,  357. 

These  considerations  seem  to  us  sufficient  to  dispose  of  the  cases 
of  the  Standard  Oil  Company,  the  Ohio  Oil  Company,  the  Prairie 
Oil  &  Gas  Company,  and  the  Tide  Water  Pipe  Company,  Limited. 
The  Standard  Oil  Company  of  Louisiana  was  incorporated  since  the 
passage  of  the  amendment,  and  before  the  beginning  of  this  suit, 
to  break  up  the  monopoly  of  the  New  Jersey  Standard  Oil  Com- 
pany. It  buys  a  large  part  of  its  oil  from  the  Prairie  Oil  &  Gas 
Company,  which  buys  it  at  the  wells  in  the  mid-continent  field  and 
transfers  the  title  to  the  Louisiana  Company  in  that  state.  Its 
case  also  is  covered  by  what  we  have  said. 

There  remains  to  be  considered  only  the  Uncle  Sam  Oil  Com- 
pany. This  company  has  a  refinery  in  Kansas  and  oil  wells  in 
Oklahoma,  with  a  pipe  line  connecting  the  two  which  it  has  used 
for  the  sole  purpose  of  conducting  oil  from  its  own  wells  to  its 
own  refinery.  It  would  be  a  perversion  of  language,  considering 
the  sense  in  which  it  is  used  in  the  statute,  to  say  that  a  man  was 
engaged  in  the  transportation  of  water  whenever  he  pumped  a  pail 
of  water  from  his  well  to  his  house.  So  as  to  oil.  When,  as  in  this 
case,  a  company  is  simply  drawing  oil  from  its  own  wells  across  a 
state  line  to  its  own  refinery,  for  its  own  use,  and  that  is  all,  we 
do  not  regard  it  as  falling  within  the  description  of  the  act,  the 
transportation  being  merely  an  incident  to  use  at  the  end.  In 
that  case  the  decree  will  be  affirmed.  In  the  others  the  decree  will 
be  reversed. 


866  BASES    OF    PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

Section  4. 
Economic  Monopoly. 

LADD  V.  SOUTHEEN  COTTON  PEESS  AND 
MANUFACTUEING  CO. 

53   Tex.   172.     1880.^ 

Moore,  Chief  Justice.  This  suit  was  brought  in  the  district 
court  of  Galveston  county,  August  3,  1877,  by  Alexander  H.  Ladd, 
the  appellant,  against  appellee.  The  Southern  Cotton  Press  and 
Manufacturing  Company,  a  corporation  under  the  laws  of  Texas, 
carrying  on  the  business  of  receiving,  storing  and  compressing  cot- 
ton for  such  parties  as  might  employ  its  services  in  that  behalf, 
to  recover  back  moneys  alleged  to  have  been  paid  by  appellant  at 
various  times  for  charges  which  were  uniformly  and  notoriously  de- 
manded and  collected  by  appellee  on  all  cotton  entrusted  to  it. 

The  right  to  recover  back  the  money  thus  paid,  is  claimed  in 
the  petition  on  the  ground  that  upon  the  facts  stated  therein  the 
property  and  services  of  appellee  had  been  submitted  to  public  use 
and  had  become  aifected  with  a  public  interest;  that  the  charges  de- 
manded by  appellee  were  unlawful  and  without  consideration,  and 
that  the  payments  had  been  made  involuntarily  and  under  duress. 

The  appellee  demurred  generally  and  specially,  that  the  facts 
stated  'in  the  petition  showed  that  the  business  carried  on  by  ap- 
pellee was  a  private  enterprise  and  occupation,  and  not  a  public 
employment ;  that  it  appeared  from  the  petition  that  the  alleged  pay- 
ments had  not  been  made  involuntarily  or  under  duress;  that  the 
matters  relied  on  to  show  duress  were  insufficient  and  too  vaguely 
pleaded,  and  that  it  appeared  from  the  petition  that  a  large  portion 
of  the  demand  sued  for  was  barred  by  the  statute  of  limitations. 

The  demurrer  was  sustained,  and  appellant  declining  to  amend, 
judgment  was  rendered  for  appellee.  From  this  judgment  an 
appeal  was  prosecuted,  and  appellants  assign  as  error  that  the 
court  should  have  overruled,  instead  of  sustaining  the  demurrer  to 
his  petition.  In  support  of  this  assignment,  his  counsel  make  in 
their  brief  these  propositions,  viz. : 

First.  The  petition  sliows  that  appellee  had  submitted  its  prop- 
erty and  services  to  public  use. 

1.  By  becoming  incorporated  by  the  legislature  for  the  purpose 
of  carrying  on  the  business  designated. 

1  The  statement  of  facts,  and  argument  of  counsel  have  been  omitted. — 
Ed. 


SEC.    IV.]  ECOXOillC    MONOPOLY.  67 

2.  By  virtue  of  the  nature  and  extent  of  the  business. 

3.  Because  by  combination  with  others  in  the  same  line  of  busi- 
ness, it  became  a  virtual  monopoly,  the  exercise  of  which  enabled 
them  to  exact  fictitious  charges,  and  charges  without  consideration, 
as  a  substantial  toll  on  nearly  all  of  the  chief  commodity  of  the 
state,  and  thereby  its  services  and  property  became  affected  with  a 
public  interest. 

Second.  That  the  charges  complained  of  having  been  utterly 
without  consideration,  and  involuntary  or  enforced  payment  having 
been  made  under  protest  and  without  mutuality  of  assent  necessary 
to  a  contract,  were  in  fact  made  under  duress  of  property. 

Are  these  propositions,  or  any  one  of  them,  applicable  to  the 
facts  averred  in  appellant's  petition,  and  if  so,  should  the  judgment 
be  reversed?  We  will  consider  them  in  the  order  in  which  they 
are  presented. 

1.  Did  appellee,  by  becoming  incorporated  by  the  legislature  for 
the  purpose  of  carrying  on  a  warehouse  and  compress  business, 
submit  its  property  and  services  to  public  use?  We  are  cited  to 
no  authority  tending  to  support  this  proposition,  and  we  are  un- 
able to  perceive  any  principle  or  reason  upon  which  it  can  be 
maintained.  The  petition  shows  that  appellee  is  a  mere  private 
corporation,  with  no  privilege  or  franchise  beyond  that  of  carry- 
ing on  in  a  corporate  capacity  the  business  in  which  it  is  engaged. 
It  is  by  reason  of  the  nature  and  character  of  the  business,  and 
not  from  the  fact  that  it  is  carried  on  by  an  individual  or  corpora- 
tion, that  the  law  holds  that  the  property  or  services  of  the  owner 
have  been  submitted  to  public  use. 

2.  The  business  of  warehousing  and  compressing  cotton,  is  free 
to  every  one  who  wishes  to  engage  in  it.  No  grant  or  franchise 
need  be  obtained  from  the  state  to  authorize  those  desiring  to  do 
so  to  embark  in  this  character  of  business.  It  is  not  one  of  the 
employments  which  the  common  law  declares  public.^  (Coggs  v. 
Barnard,  2  Ld.  Raym. ;  2  Pars,  on  Con.,  139;  Story  on  Bail.,  sec. 
442.)  Nor  is  it  claimed  to  have  been  made  so  by  statute.  And 
we  know  of  no  authority,  and  none  has  been  shown  us,  for  saying 
that  a  business  .strictly  juris  privati  will  become  juris  puhlici, 
merely  by  reason  of  its  extent.  If  the  magnitude  of  a  particular 
business  is  such,  and  the  persons  affected  by  it  so  numerous,  that 
the  interest  of  society  demands  that  the  rules  and  principles  ap- 
plicable to  public  employments  should  be  applied  to  it,  this  would 
have  to  be  done  by  the  legislature  (if  not  restrained  from  doing 
so  by  the  constitution)  before  a  demand  for  such  an  use  could  be 
enforced  by  the  courts. 

2  See  dicta  contra  in  Nash  v.  Page  (1882),  80  Ky.  539. 


68  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

If  the  right  to  regulate  property  and  the  character  of  its  em- 
ployment is,  by  reason  of  its  extent,  and  the  number  of  persons 
interested  in  or  alfected  by  the  manner  or  circumstances  of  its 
use,  as  counsel  for  appellant  forcibly  declares,  "  of  the  very  essence 
of  government,"  the  exercise  of  this  right  or  power  pertains  to  the 
legislative  and  not  the  judicial  department. 

3.  Evidently  appellant  does  not  intend  to  assert  that  appellee, 
by  combination  with  others  engaged  in  like  business,  acquired  a 
monopoly  or  "  virtual  monopoly  "  of  the  character  declared  by  the 
constitution  of  the  state  to  be  "contrary  to  the  genius  of  a  free 
government,"  and  never  to  be  allowed.  (Art.  1,  sec.  26.)  But 
the  import  of  his  proposition,  as  we  understand  it,  is  that  appellee 
and  others  engaged  in  the  same  business,  though  this  business  was' 
a  legitimate  and  lawful  one,  had,  without  any  exclusive  right  to 
conduct  it,  by  combination  virtually  acquired  the  exclusive  control 
of  the  business  in  the  city  and  port  of  Galveston,  which  enabled 
them  "  to  exact  fictitious  charges  and  charges  without  consider- 
ation," and  thereby  to  collect  "toll  on  nearly  all  the  chief  com- 
modity of  the  state."  And  that  by  reason  of  this  fact  the  prop- 
erty and  service  employed  in  such  business  became  affected  with  a 
public  interest.  But  conceding  the  premises,  the  conclusion  sought 
to  be  deduced  seems  to  us  to  be  a  7ion  sequiter. 

It  will  readily  be  admitted  that  in  many  instances  combinations 
may  be  made  by  parties  engaged  in  a  particular  trade,  or  by  those 
who,  at  the  time,  have  the  control  of  the  market  for  some  article 
of  prime  necessity,  to  make  most  unconceivable  exactions  for  their 
services  or  demand  a  most  extortionate  price  for  their  com- 
modities. But  certainly  this  does  not  change  the  nature  of  the 
employment  in  which  they  are  engaged,  or  authorize  the  court  to 
say,  when  the  business  of  the  parties  is  strictly  private,  that  it  has 
become  public.  If  the  combination  is  illegal,  the  parties  to  it  will 
subject  themselves  to  such  penalties  as  the  law  imposes;  and  if 
the  injury  to  society  to  be  apprehended  from  such  combinations  is 
of  a  character  demanding  it,  the  legislature  may,  by  adequate  pro- 
vision, regulate  or  prohibit  persons  from  engaging  in  them.  Nor 
do  we  say  that  there  may  not  be  instances  where,  by  combination, 
or  even  without  it,  some  particular  business,  by  reason  of  its  ex- 
tent and  magnitude  and  the  great  number  of  persons  affected  by 
it,  though  strictly  privati  juris  under  the  common  law  and  pre- 
vious statutes,  may  be  declared  publici  juris  by  the  legislature. 
This  seems  in  effect  what  was  held  by  the  supreme  court  of  the 
United  States  to  have  been  done  by  the  legislature  of  Illinois 
(4  Otto,  125).  But  as  this  is  not  the  character  of  this  case,  we 
are  not  called  upon  to  express  an  authoritative  opinion  on  the 


SEC.    IV.]  ECONOMIC    MONOPOLY.  69 

point.  It  is  sufficient  for  us  to  say  that  in  the  absence  of  legisla- 
tion to  that  effect,  a  party  who  has  not  subjected  his  property 
and  services  to  public  use  by  the  character  of  the  business  in  which 
he  is  engaged,  does  not  do  so  by  reason  of  combination  with  others 
in  a  like  business,  though  he  is  enabled  thereby  to  exact  from 
those  who  may  employ  him  unreasonable  and  extortionate  charges 
for  the  services  rendered.  Whether  pa}Tnents  made  under  such  cir- 
cumstances may  not  be  held  to  have  been  paid  under  duress,  is 
another  question  to  be  considered  hereafter.  Xor  can  it  justly  be 
held  that  the  mere  extent  and  magnitude  of  the  business  changes  a 
private  charge  for  services  into  a  toll  to  be  regulated  by  law.  Xor 
if  so,  that  the  court  may,  in  the  absence  of  legislation  upon  the 
subject,  substitute  its  judgment  as  to  the  proper  amount  of  such 
toll  for  the  contract  of  the  parties. 

But  although  none  of  the  grounds  urged  by  appellant  in  support 
of  his  proposition,  "  that  appellee  had  submitted  its  property  and 
services  to  public  use,"  taken  severally  and  of  themselves  warrant 
his  conclusion,  a  fair  consideration  of  the  argument  of  his  counsel 
requires  us  to  consider  the  effect,  not  only  of  each  of  the  positions, 
standing  alone,  upon  the  business  of  appellee,  but  also  their  effect 
in  the  aggregate,  in  connection  with  all  the  facts  and  circum- 
stances connected  with  or  relating  to  the  business  in  which  ap- 
pellee was  engaged  and  the  manner  in  which  it  was  conducted  and 
carried  on. 

In  doing  this  it  must  be  conceded,  as  alleged  in  appellant's  peti- 
tion, that  appellee  and  those  engaged  in  the  same  business  at  the 
port  of  Galveston,  with  the  exception  of  one  small  establishment 
capable  of  doing  but  a  limited  business,  had  combined  and  fixed 
the  charges  complained  of ;  that  the  business  in  which  appellee  and 
his  confederates  were  engaged  was  necessary  to  the  public,  in  refer- 
ence to  the  transit  of  cotton  from  the  producer  to  the  manufacturer 
and  consumer;  that  the  charges  complained  of  were  a  common 
charge  against  all  comers  and  upon  every  bale  of  cotton,  and  was 
also  a  charge  demanded  and  enforced  without  consideration,  a  com- 
pliance with  which  was,  under  the  circumstances,  essential  to  the 
business  life  of,  and  the  only  escape  from  business  ruin  by  all  who 
follow  the  business  of  brokerage  in  cotton  in  the  city  of  Gal- 
veston. 

Xow,  giving  the  fullest  scope  and  import  to  these  and  other 
allegations  made  in  the  petition,  how  is  it  shown  that  appellee's 
business  is  of  a  character  with  which  the  courts  of  the  country 
have  the  right  to  interfere;  or  from  what  source,  we  ask,  do  they 
derive  their  authority  to  regulate  the  conditions  and  terms  upon 
which  it  shall  be  conducted?     It  is  not  contended  by  appellant. 


70  BASES    OF    PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

that,  as  ordinarily  conducted,  the  business  of  receiving,  storing, 
compressing  and  delivering  cotton  is  ijrivati  [puhlici?]  juris,  which 
those  engaged  in  it  have  not  the  right  to  fix  the  rates  and  conditions 
upon  which  it  will  be  conducted.  But  the  argument  seems  to  be, 
that,  in  view  of  the  necessities  of  trade,  its  magnitude  and  effect  upon 
the  interest  of  the  people  throughout  the  state,  as  well  as  of  those 
engaged  in  the  business  of  appellant,  it  has  become  of  like  public 
interest  as  other  occupations  and  trades  which  the  law  pronounces 
and  holds  to  be  juris  publici.  The  conclusion  sought  to  be  main- 
tained rests  upon  the  hypothesis  that  whenever  it  is  made  to  appear 
that  any  particular  business  is  of  so  general  public  interest  as  that 
which  the  law  holds  to  be  juris  puhlici,  the  courts  have  the  power 
to  so  declare  and  hold  it.  The  case  of  Munn  v.  Illinois,  4  Otto, 
125,  seems  to  be  the  authority  mainly  relied  on  to  support  this 
position.  We  cannot  regard  this  case  as  authority  for  such  a 
doctrine.  It  was  brought  to  enforce  the  statute  law  of  the  state. 
The  conclusion  to  be  drawn  from  it  is,  as  we  think,  that  the  legis- 
lature may  declare  a  particular  business  publici  juris,  if  the  facts 
and  circumstances  under  which  it  is  conducted  justify  and  the 
good  of  society  requires  it ;  but  not  that  the  court  may  so  treat  it 
in  advance  of  legislative  recognition  or  declaration.  Whether  this 
may  be  done,  even  by  the  legislature,  without  infringing  upon 
the  constitution,  need  not  now  be  considered.  Neither  is  it  neces- 
sary for  us  at  present  to  determine  whether  the  submission  of  prop- 
erty and  service  to  public  use  (as  there  is  high  authority  for  hold- 
ing) is  solely  dependent  upon  the  fact  that  those  engaged  in  such 
business  enjoy  some  franchise,  privilege  or  immunity  from  the 
state,  or  did  so  in  the  early  days  of  the  common  law  when  this 
character  was  impressed  upon  their  property  or  service.  (Dis- 
senting opinion  of  Fields,  J.,  in  Munn  v.  Illinois,  supra,  and 
authorities  cited.) 

But  if  it  is  admitted  that  appellee's  property  and  services  were 
affected  with  a  public  interest,  and  the  amount  demanded  of,  and 
paid  by  appellant,  was  greater  than  what  was  reasonable,  as  it  ap- 
pears from  the  petition  that  the  payments  were  made  with  full 
knowledge  of  all  the  facts  and  without  fraud  or  deception,  unless 
made  under  duress,  the  amount  thus  paid  cannot  be  recovered  back, 
although  so  much  as  exceeds  the  reasonable  value  of  the  services 
rendered  was  paid  without  consideration.  (34  Ala.,  405;  7  Cush., 
125;  59  N.  Y.,  603;  50  Ga.,  304.) 

A  mere  protest  against  a  charge  does  not  entitle  the  party  who 
voluntarily  and  without  duress  or  compulsion  pays  it,  to  sue  for 
and  recover  it  back.  (5  Cush.,  115;  29  Md.,  415;  25  Ind.,  261; 
46  Cal.,  589;  5  Kan.,  412.) 


SEC.    IV.]  ECONOMIC    MONOPOLY.  71 

Second.  It  remains  to  inquire  whether  the  money  sued  for  was 
paid  without  consideration,  involuntarily  and  under  duress.  There 
is  no  pretense  of  duress  except  b}-  reason  of  the  alleged  combination 
of  appellee  and  its  confederates,  to  charge  a  larger  amount  than  the 
services  rendered  were  reasonably  worth ;  and  for  the  delivery  of 
cotton  which  appellant  says  was  not  in  fact  actually  delivered,  and 
the  agreement  between  appellee  and  its  confederates  that  they 
would  not  do  business  with  any  parties  who  should  fail  or  refuse 
to  pay  any  of  their  charges,  or  who  should  resort  to  the  courts  to 
controvert  or  dispute  them.  As  the  business  in  which  appellee  is 
engaged  is  open  to  all  who  wished  to  engage  in  it,  and  was  not,  as 
we  have  seen,  affected  with  a  public  interest,  any  one  engaging 
in  it  may  prescribe  the  terms  upon  which  he  will  transact  it.  All 
parties  employing  his  services,  knowing  his  terms,  would  be  bound 
by  them.  If  it  is  lawful  for  a  single  individual  engaged  in  other 
business  to  prescribe  the  terms  upon  which  he  will  conduct  it,  we 
do  not  see  how  it  can  become  unlawful  by  others  in  the  same  em- 
ployment agreeing  with  him  that  they  will  also  transact  their  busi- 
ness upon  the  same  terms  and  conditions.  (Kirkman  v.  Walker,  6 
Term,  14.) 

If  appellee  may  lawfully  decline  doing  business  for  or  with  those 
who  refuse  to  comply  with  the  terms  which  it  prescribes,  the  fact 
that  a  failure  to  conform  to  these  terms  would  result  in  its  de- 
clining in  future  to  transact  business  with  the  party  thus  failing, 
cannot  be  held  to  be  duress.  On  the  other  hand,  if  the  terms  and 
conditions  are  illegal  and  such  as  a  party  has  no  right  to  pre- 
scribe for  himself  or  in  combination  with  all  parties  engaged  in 
like  business,  thereby  securing  a  virtual  monopoly,  we  can  see  no 
better  reason  for  saying  in  this  than  in  the  other  case  that  con- 
tracts entered  into  and  business  conducted  for  a  series  of  years 
with  one  of  the  parties  to  such  agreement  with  knowledge  of  it, 
can  be  held  to  have  been  under  duress.  If  the  combination  is 
illegal  and  the  terms  prescribed  by  it  are  such  as  the  parties  have 
no  right  to  demand,  certainly  the  courts  are  not  impotent  to  re- 
strain the  parties  to  such  illegal  combinations  and  give  redress  to 
those  improperly  affected  by  it.  (To  entitle  a  party  voluntarily 
paying  money  to  recover  it  back  on  the  ground  of  duress,  he  must, 
at  the  time  of  such  payment,  be  under  the  necessity  of  either  then 
making  the  payment,  or  of  resorting  to  the  courts  to  get  possession 
of  property  wrongfully  detained,  or  to  recover  his  liberty,  or  at 
least  show  that  there  is  an  apparent  necessity  for  resorting  to  the 
courts  for  one  or  the  other  of  these  purposes,' 

The  petition  shows  that  the  transactions  between  the  parties  to 
the  suit  do  not  come  within  either  of  these  categories.     Appellant 


72  BASES    OF    PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

certainly  had  ample  time  and  opportunity  to  have  had  his  day 
in  court,  before  the  business  between  him  and  appellee  was  closed 
by  the  last  voluntary  payment  by  him.  Not  having  complained 
until  the  late  date  at  which  this  suit  was  brought,  he  cannot  now  be 
heard  to  complain.  (5  Otto,  112-13;  4  Gill  (Md.),  425;  1  Ohio 
St.,  268;  34  Md.,  436;  115  Mass.,  367. 
The  judgment  is  affirmed.^ 


THE  INTEE-OCEAN  PUBLISHING  CO.  v.  THE 
ASSOCIATED  PEESS. 

184  111.  438.     1900.^ 

The  Inter-Ocean  Publishing  Company,  a  corporation  organized 
under  the  laws  of  the  State  of  Illinois,  is  engaged  in  publishing 
two  newspapers  in  the  city  of  Chicago,  known  as  The  Daily  Inter- 
Ocean  and  The  Weekly  Inter-Ocean,  which  have  a  wide  circu- 
lation in  the  States  and  Territories  of  the  United  States.  The  As- 
sociated Press  is  a  corporation  organized  under  the  laws  of  the 
State  of  Illinois  in  1892.  The  object  of  its  creation  was,  "  to  buy, 
gather  and  accumulate  information  and  news ;  to  vend,  supply,  dis- 
tribute and  publish  the  same;  to  purchase,  erect,  lease,  operate  and 
sell  telegraph  and  telephone  lines  and  other  means  of  transmitting 
news;  to  publish  periodicals;  to  make  and  deal  in  periodicals  and 
other  goods,  wares  and  merchandise."  It  has  about  eighteen  by- 
laws with  about  seventy-five  subdivisions  thereof.  The  stock- 
holders of  the  Associated  Press  are  the  proprietors  of  newspapers, 
and  the  only  business  of  the  corporation  is  that  enunciated  in  its 
charter,  and  is  mainly  buying,  gathering  and  accumulating  news 
and  furnishing  the  same  to  persons  and  corporations  who  have  en- 
tered into  contract  therefor.  It  may  furnish  news  to  persons  and 
corporations  other  than  those  who  are  stockholders,  and  the  term 
"  members,"  used  in  its  by-laws,  applies  to  proprietors  of  news- 
papers, other  than  its  stockholders,  who  have  entered  into  contracts 
with  it  for  procuring  news.  It  does  not  appear  that  it  has  availed 
itself  of  any  of  the  powers  conferred  by  its  charter  other  than 
that  of  gathering  news  and  distributing  the  same  to  its  members. 
Under  the  by-laws  of  appellee  the  Inter-Ocean  Publishing  Com- 
pany became  a  stockholder. 

The  by-laws  of  the  appellee  provide,  among  other  things,  as  fol- 

3  Accord,  Delaware.  L.  &  W.  R.  R.  v.  Central  S.  Y.  &  T.  Co.  (1889),  45 
N.  J.  Eq.  50. 

1  The  statement  of  facts  is  abbreviated,  arguments  of  counsel  are  not 
reprinted,  and  parts  of  the  opinion  of  Phillips,  J.,  are  omitted. —  Ed. 


SEC.   IV.]  ECONOMIC   MONOPOLY.  73 

lows :  "  No  member  shall  furnish,  or  permit  any  one  to  furnish, 
its  special  or  other  news  to,  or  shall  receive  news  from,  any  person, 
firm  or  corporation  which  shall  have  been  declared  by  the  board 
of  directors  or  the  stockholders  to  be  antagonistic  to  the  association ; 
and  no  member  shall  furnish  news  to  any  other  person,  firm  or 
corporation  engaged  in  the  business  of  collecting  or  transmitting 
news,  except  with  the  written  consent  of  the  board  of  directors." 
The  by-laws  also  provide  that  the  board  of  directors  shall  have  the 
power  to  suspend  a  member  for  furnishing,  or  purchasing  news  con- 
trary to  the  rule  just  quoted,  and  the  contract  between  the  appellant 
and  the  appellee  expressly  incorporated  these  rules. 

The  appellant  bought  news  from  the  Sun  Printing  and  Publish- 
ing Association  of  New  York,  which  had  been  declared  antagonistic 
to  the  appellee.  Certain  other  newspapers  complained  to  appellee 
of  appellant's  conduct  in  this  regard,  and  appellee  notified  appellant 
that  a  meeting  of  appellee's  board  of  directors  would  be  held  at  a 
time  and  place  mentioned  to  take  action  on  these  complaints.  Be- 
fore the  time  set  for  the  hearing  appellant  filed  its  bill  for  an  in- 
junction against  the  appellee  from  suspending  or  expelling  it  from 
its  membership,  and  from  refusing  to  furnish  it  news  according  to 
the  terms  of  its  contract.  A  decree  was  rendered  dismissing  the 
bill  for  want  of  equity.  On  appeal  to  the  Appellate  Court  for  the 
First  District  the  decree  was  affirmed,  and  this  appeal  is  prose- 
cuted. 

Mr.  Justice  Phillips  delivered  the  opinion  of  the  court. 

The  organization  of  such  a  method  of  gathering  information  and 
news  from  so  wide  an  extent  of  territory  as  is  done  by  the  appellee 
corporation,  and  the  dissemination  of  that  news,  requires  the  ex- 
penditure of  vast  sums  of  money.  It  reaches  out  to  the  various 
parts  of  the  United  States,  where  its  agents  gather  news  which 
is  wired  to  it,  and  through  it  such  news  is  received  by  the  various 
important  newspapers  of  the  country.  Scarcely  any  newspaper 
could  organize  and  conduct  the  means  of  gathering  the  informa- 
tion that  is  centered  in  an  association  of  the  character  of  the  ap- 
pellee because  of  the  enormous  expense,  and  no  paper  could  be  re- 
garded as  a  newspaper  of  the  day  unless  it  had  access  to  and 
published  the  reports  from  such  an  association '  as  appellee.  For 
news  gathered  from  all  parts  of  the  country  the  various  newspapers 
are  almost  solely  dependent  on  such  an  association,  and  if  they  are 
prohibited  from  publishing  it  or  its  use  is  refused  to  them,  their 
character  as  newspapers  is  destroyed  and  they  would  soon  become 
practically  worthless  publications.  The  Associated  Press,  from 
the  time  of  its  organization  and  establishment  in  business,  sold  its 
news  reports  to  various  newspapers  who  became  members,  and  the 


74  BASES    OF    PUBLIC    SERVICE   DUTIES.  [CHAP,   I. 

publication  of  that  news  became  of  vast  importance  to  the  public, 
so  that  public  interest  is  attached  to  the  dissemination  of  that  news. 
The  manner  in  which  that  corporation  has  used  its  franchise  has 
charged  its  business  with  a  public  interest.  It  has  devoted  its 
property  to  a  public  use,  and  has,  in  effect,  granted  to  the  public 
such  an  interest  in  its  use  that  it  must  submit  to  be  controlled  by 
the  public  for  the  common  good,  to  the  extent  of  the  interest  it 
has  thus  created  in  the  public  in  its  private  property.  The  sole 
purpose  for  which  news  was  gathered  was  that  the  same  should 
be  sold,  and  all  newspaper  publishers  desiring  to  purchase  such 
news  for  publication  are  entitled  to  purchase  the  same  without  dis- 
crimination against  them. 

It  was  held  in  New  York  and  Chicago  Grain  and  Stock  Exchange 
V.  Board  of  Trade,  127  111.  153  (on  p.  163)  :  "Assuming  these 
market  quotations  and  reports  are  property  and  the  private  property 
of  the  board  of  trade,  yet  if  they  have  been  so  used  by  the  board, 
and  by  the  telegraph  company  with  the  knowledge  and  consent  of 
the  board,  as  to  become  affected  with  a  public  interest,  then  they 
are  subject  to  such  public  regulation  by  the  legislature  and  the 
courts  as  is  necessary  to  prevent  injury  to  such  public  interest. 
The  doctrine  in  question  has  application  both  to  the  property  of 
individuals  and  of  corporations,  and  it  is  therefore  immaterial  that 
any  such  corporation  may  be  a  mere  private  corporation.  If  the 
interest  is  public,  then  it  is  necessarily,  to  all  alike,  common  to 
all  and  upon  equal  terms.  The  doctrine,  as  applied  to  the  matter 
of  these  market  quotations,  would  forbid  that  a  monopoly  should 
be  made  of  them  by  furnishing  them  to  some  and  refusing  them 
to  others  who  are  equally  willing  to  pay  for  them  and  be  governed 
by  all  reasonable  rules  and  regulations,  and  would  prevent  the 
board  of  trade  or  the  telegraph  companies  from  unjustly  discrimi- 
nating in  respect  to  the  parties  who  will  be  allowed  to  receive 
them."  This  principle  is  sustained  in  Friedman  v.  Telegraph  Co. 
33  Hun,  4,  and  Smith  v.  Telegraph  Co.  43  id.  454.  The  appellee 
corporation  being  engaged  in  a  business  upon  which  a  public  in- 
terest is  engrafted,  upon  principles  of  justice  it  can  make  no  dis- 
tinction with  respect  to  persons  who  wish  to  purchase  information 
and  news,  for  purposes  of  publication,  which  it  was  created  to 
furnish.^ 

2  But  soo  Live  Stock  Conimission  Co.  v.  Live  Stock  Exchange  (1892),  143 
111.  210,  in  which  the  Court  said  in  part : 

"  But  we  are  not  prepared  to  hold  that  the  mere  fact  that  the  business 
of  a  particular  market  has  become  very  large,  gives  to  the  court  any  power 
to  declare  such  markets  public  and  impressed  with  a  public  use,  or  to  apply 
to  them  any  rules  of  public  policy  peculiar  to  that  class  of  markets." 

"  It  is  not  claimed  that  the  kee[)ing  or  doing  business  in  a  market  of  this 
character  is  one  of  the  employments  which  the  common  law  declares  to  be 


SEC.    IV.]  ECONOMIC    MONOPOLY.  75 

It  is  urged,  however,  that  by  the  terms  of  the  contract  appellant 
cannot  retain  its  membership  and  stock  in  the  Associated  Press, 
and  have  the  right  to  purchase  news  accumulated  by  it  at  contract 
price,  without  complying  with  that  part  of  the  contract  which  re- 
quires appellant  to  refrain  from  receiving  news  from  any  person 
or  corporation  whicli  has  been  declared  by  the  board  of  directors  of 
appellee  to  be  antagonistic  to  the  latter,  and  without  appellant 
being  controlled  or  governed  by  the  by-law  of  appellee  to  the  same 
effect.  The  character  of  appellee's  business  is  not  to  be  determined 
by  the  contract  which  it  made  respecting  the  liabilities  which  would 
attend  it,  but  by  the  nature  of  the  business,  its  fixed  legal  charac- 
ter, growing  out  of  the  manner  in  which  that  business  is  conducted, 
and  the  purpose  of  its  creation.  The  legal  character  of  the  corpora- 
tion and  its  duties  cannot  be  disregarded  because  of  any  stipulation 
incorporated  in  a  contract  that  it  should  not  be  liable  to  discharge 
a  public  duty.  Its  obligation  to  serve  the  public  is  not  one  resting 
on  contract,  but  grows  out  of  the  fact  that  it  is  in  the  discharge 
of  a  public  duty,  or  a  private  duty  which  has  been  so  conducted 
that  a  public  interest  has  attached  tliereto. 

,The  clause  of  the  contract  in  this  case  which  sought  to  restrict 
ap'pellant  from  obtaining  news  from  other  sources  than  from  ap- 
pellee is  an  attempt  at  restriction  upon  the  trade  and  business 
among  the  citizens  of  a  common  country!  Competition  can  never 
be  held  hostile  to  public  interests,  and  efforts  to  prevent  competition 

public,  nor  is  it  pretended  that  it  has  been  made  so  by  statute.  Ordinarily 
the  adoption  of  new  rules  of  public  policy,  or  the  application  of  existing 
rules  to  new  subjects,  is  for  the  Legislature  and  not  for  the  courts.  _  Ac- 
cordingly it  may  be  held  to  be  a  general,  though  perhaps  not  an  invariable 
rule,  that  the  question  whether  a  particular  business  which  has  hitherto 
been  deemed  to  be  private,  is  public  and  impressed  with  a  public  use,  is 
for  the  Legislature.  The  doctrine  on  this  subject  is  stated  in  Ladd  v.  bouth- 
ern  Cotton  Press  Manufacturing  Company.  53  Tex.  172,  where  a  question 
very  similar  to  the  one  under  discussion  was  before  the  court,  as  follows  : 
'  We  know  of  no  authoritv.  and  none  has  been  shown  us.  for  saying  that  a 
business  strictly  juris  privaii  will  become  juris  puhUci,  merely  by  reason 
of  its  extent.  "^If  the  magnitude  of  a  business  is  such,  and  the  persons 
affected  by  it  are  so  numerous,  that  the  interests  of  society  demand  that 
the  rules  and  principles  applicable  to  public  employment  should  be  applied 
to  it,  this  would  have  to  be  done  by  the  Legislature  (if  not  restrained  from 
doing  so  bv  the  Constitution),  before  a  demand  for  such  use  could  be 
enforced  by  the  courts.'  The  view  thus  expressed  would  seem  to  be  pre- 
cisely applicable  to  the  present  case,  and  we  are  inclined  to  adopt  it  as  a 
correct  statement  .of  the  law  as  it  should  be  applied  to  the  facts  before  us. 
We  do  not  sav  that  there  may  not  be  exceptions  to  the  rule  thus  stated, 
but  if  there  are  they  are  not  of  such  a  character  as  to  be  material  here. 

"  Apart  from  the  consideration  that  the  extension  and  application  of  even 
existing  rules  of  law  to  subjects  not  heretofore  within  their  purview  13 
legislative  in  its  nature,  the  determination  by  the  courts  as  to  the  precise 
point  at  which  a  mere  private  business  reaches  that  stage  of  growth  and 
expansion  which  is  sufficient  to  render  it  juris  publici.  would  be  surrounded 
by  very  great  difficulties,  and  would  present  questions  for  which  the  courts, 
unaided  by  legislation,  would  be  able  to  find  no  just  or  satisfactory  cri- 
terion or  test.  But  when  the  Legislature,  acting  upon  a  competent  state  ot 
facts,  has  interposed  and  declared  the  business  to  be  juris  publici,  all  dim- 
culty  is  removed." 


76  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

by  contract  or  otherwise  can  never  be  looked  upon  with  favor  by 
the  courts.  In  People  v.  Live  Stock  Exchange,  170  111,  556,  it 
was  said  (p.  566):  "Efforts  to  prevent  competition  and  to  re- 
strict individual  efforts  and  freedom  of  action  in  trade  and  com- 
merce are  restrictions  hostile  to  the  public  welfare,  not  consonant 
with  the  spirit  of  our  institutions  and  in  violation  of  law." ' 

(The  provisions  of  the  contract  that  the  appellant  should  purchase 
news  from  no  other  source,  and  the  restrictive  clause  of  the  by- 
law, are  both  null  and  void,  and  the  contract  is  the  same  as  if 
these  provisions  had  not  been  incorporated  therein.)  Rejecting  en- 
tirely these  illegal  provisions,  on  which  the  right' to  suspend  the 
appellant  as  a  member  and  to  refuse  to  furnish  it  news  and  informa- 
tion gathered  by  the  Associated  Press  for  publication  rests,  no 
reason  is  presented,  under  the  pleadings  and  affidavits  in  the  case, 
why  the  appellant  is  not  entitled  to  an  injunction,  as  prayed  for 
in  its  bill. 

We  hold  that  the  circuit  court  of  Cook  county  erred  in  entering 
a  decree  dismissing  the  bill  for  want  of  equity,  and  the  Appellate 
Court  for  the  First  District  erred  in  affirming  the  same.  The 
judgment  of  the  Appellate  Court  for  the  First  District  and  the 
decree  of  the  circuit  court  of  Cook  county  are  each  reversed,  and 
the  cause  is  remanded  to  the  circuit  court  of  Cook  county,  with 
directions  to  enter  a  decree  as  prayed  for  in  the  bill. 

Reversed  and  remanded.^ 

3  Following  the  principal  case,  it  was  determined  in  News  Publishing  Co. 
V.  Associated  Press  (1904),  114  III.  App.  241,  that  the  defendant  was  under 
a  duty  to  render  news  service  which  it  had  contracted  to  render  to  one  of 
its  members  upon  the  same  terms  and  conditions  upon  which  it  rendered  like 
service  to  other  newspaper  publishers. 

In  State  v.  Nebraska  Telephone  Co.  (1885),  17  Neb.  126,  where  it  was 
sought  by  mandamus  to  compel  the  company  to  give  relator  telephone  serv- 
ice, the  Court  concluded  that  the  company  must  serve  relator,  and  said  : 

"  The  views  herein  expressed  are  not  new.  Similar  questions  have  arisen 
in,  and  have  been  frequently  discussed  and  decided  by,  the  courts,  and  no 
statute  has  been  deemed  necessary  to  aid  the  courts  in  holding  that  when 
a  person  or  company  undertakes  to  supply  a  demand  which  is  '  affected  with 
a  public  interest,'  it  must  supply  all  alike  who  are  alike  situated,  and  not 
discriminate  in  favor  of,  nor  against  any."  The  Court  cited  in  support  of 
this  proposition  the  last  part  of  Lord  Ellenborough's  opinion  in  Allnutt  v. 
Inglis,  supra.  Although  the  Court  said  that  "  the  respondent  is  not  pos- 
sessed of  any  special  privileges,"  it  is  in  fact  stated  in  the  case  that  "  the 
wires  of  respondent  pass  the  office  of  relator.  Its  posts  are  planted  in  the 
street  in  front  of  his  door." 

In  some  other  cases  virtual  monopoly  has  been  referred  to  as  though  it 
were  a  possible  ground  for  public  service  duties,  although  the  decisions  in 
those  cases  have  really  been  reached  on  the  ground  of  grant  of  franchises, 
or  statutory  duty.  See  for  example,  Williams  v.  Mutual  Gas  Co.  (1884), 
l.'')2  Mich.  409;  Wheeler  v.  Northern  C.  I.  Co.  (1887),  10  Col.  .582;  Owens- 
burg  G.  L.  Co.  V.  Ilildebrand  (Ky.,  1897),  42  S.  W.  3.51;  Cincinnati  H.  & 
D.  R.  R.  Co.  V.  Village  of  Rowling  Green  (1879),  .57  Oh.  St.  3.30.  And  see 
Mr.  Justice  Miller's  comment  on  Munn  v.  Illinois,  in  Wabash,  etc.,  Ry. 
Co.  V.  Illinois  (1880),  118  U.  S.  557,  509.  See  also  dicta  in  Nash  v.  Page 
(1882),  80  Ky.  539. 


SEC.   IV.]  ECOXOillC   MONOPOLY.  77 


STATE  ex  rel.  STAE  PUBLISHIXG  CO.  v.  THE  ASSOCI- 
ATED PRESS. 

159  Mo.  410.     1901.^ 

Sherwood,  J.  The  object  of  this  original  proceeding  is  to  com- 
pel respondent,  the  Associated  Press,  to  furnish  to  the  Star  Pub- 
lishing Company,  for  publication  in  its  newspaper,  The  Star,  the 
budget  of  news  collected  daily  by  respondent,  and  also  its  Saturday 
night  news  reports. 

The  substance  of  the  issues  presented  by  the  pleadings  of  the 
parties  to  this  litigation  has  been  very  well  condensed  by  counsel 
for  respondent,  and  we  adopt  such  condensation :  Relator  asserts : 
(1)  That  it  has  a  contract  with  the  Associated  Press  for  the  Sun- 
day morning  news.  (3)  That  the  gathering  of  general  news  for 
publication  in  a  daily  newspaper  is  a  public  employment,  which 
must  be  exercised  by  those  who  engage  in  it  for  all  publishers  of 
dailies  who  may  desire  it,  upon  equal  terms,  and  without  discrimina- 
tion. (3)  That  the  Associated  Press  has,  by  its  charter,  assumed 
this  public  employment,  and  so  is  bound  to  exercise  it  on  behalf  of 
the  relator,  upon  tender  of  compensation  equal  to  that  paid  by 
other  publishers  similarly  situated,  and  receiving  a  similar  service. 
(4)  That  the  Associated  Press  has  broken  down  all  competitors, 
and  secured  a  monopoly  of  the  business  of  newsgathering,  in 
consequence  of  which  it  is  not  practicable  to  publish  a  daily  news- 
paper without  the  aid  of  its  service.  (5)  That  the  Associated  Press 
has  been  granted  telegraph  and  telephone  franchises  by  the  states 
of  Illinois  and  Missouri,  and  also  possesses  the  power  of  eminent 
domain.  (6)  That  the  by-law  of  the  Associated  Press  which  makes 
the  consent  of  existing  members  a  condition  of  admitting  new 
members  in  any  locality  is  in  violation  of  the  anti-trust  laws  of 
Missouri,  Illinois,  and  the  United  States.  The  respondent,  on  tlie 
other  hand,  asserts:  (1)  That  it  never  made  any  contract  with 
the  relator.  (2)  That  the  gathering  of  news,  whether  for  daily 
newspapers  or  for  other  publications,  is  a  purely  private  business, 
requiring  for  its' conduct  no  public  franchises  or  privileges.  (3) 
That,  while  the  Associated  Press  is  in  form  a  coiporation  for 
pecuniary  profit,  in  its  substance  it  is  but  a  voluntary  association 
of  publishers  of  newspapers,  who  have  combined  their  energies 
for  the  sake  of  greater  efficiency  and  economy  in  newsgathering. 
(4)   That  it  has  not  and  cannot  possibly  monopolize  the  business 

1  Arguments  of  counsel  and  considerable  parts  of  the  opinion  are  omitted. 
—  Ed. 


78  BASES    OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

of  newsgathering,  and  that  in  fact  there  are  now  other  general 
newsgathering  agencies  in  successful  operation  in  the  United  States. 
(5  That  it  does  not  own  or  operate  telegraph  or  telephone  lines, 
and  has  no  means  for  the  transmission  of  news  except  such  as  are 
open  to  everybody  on  like  terms.  (6)  That  it  has  never  exercised, 
and  does  not  possess,  the  power  of  eminent  domain.  (7)  That  it  is 
not  a  trust  in  any  sense,  nor  is  there  anything  unlawful  in  its 
methods  or  aims,  since  that  which  the  combination  accomplishes 
among  its  members  has  exclusive  reference  to  a  matter  of  internal 
economy,  and  leaves  the  members  unaffected  and  unrestraine'd  in 
so  far  as  concerns  their  relations  to  the  general  public.  (8) 
That  its  business  is  national  and  international  in  its  scope  and 
character,  and  so  is  protected  against  state  interference  by  various 
provisions  of  the  federal  constitution,  whicli  are  cited. 

It  has  been  thought  best  to  consider  at  large  the  doctrine 
announced  in  the  case  relied  on,^  as  well  as  opposing  views,  in 
order  to  endeavor  to  discover  whether  Munn's  case,  granting  it 
correctly  decided,  has  any  application  to  the  case  at  bar.  Follow- 
ing a  familiar  rule,  the  general  words  employed  in  that  opinion 
should  be  restricted  to  the  particular  facts  of  that  case,  and  should 
not  be  extended  to  other  cases  which  could  not  have  been  in  the 
mind  of  the  court  at  the  time ;  nor  has  that  court  so  extended  them 
to  any  case  of  similar  sort  to  the  one  before  us. 

The  controlling  element  which  gave  origin  to  the  opinion  relied 
on  seems  to  have  been  that  of  a  monopoly.  But,  of  course,  that 
element  can  have  no  place  in  the  present  instance,  because  re- 
spondent has  been  granted  no  special  or  exclusive  right  or  priv- 
ilege by  the  state,  nor  has  it  received  any  benefits  from  that 
quarter.  Nor  has  the  respondent  acquired  any  additional  right> 
by  reason  of  its  incorporation,  to  that  it  possessed  before.  Every 
one  is  at  liberty  to  gather  news,  and  the  fact  that  one  has  greater 
facilities  or  finances  for  gathering  and  transmitting  news,  or  that 
the  business  has  grown  into  one  of  great  magnitude,  wide- 
spread in  its  ramifications,  or  that  mere  incorporation  has  been 
granted  a  company  organized  for  the  purpose  of  gathering  news, 
does  not  and  cannot  of  itself  give  the  state  the  right  to  regulate 
what  before  incorporation  was  but  a  natural  right.  [Tied.  Pol. 
Pow.  p.  234,  §  93.] 

Were  the  rule  otherwise  than  as  just  stated,  the  effect  would 
be  to  deprive  a  person  of  a  right  to  pursue  any  lawful  calling, 
or  to  contract  where  and  with  whomsoever  and  at  what  price  he 
will.  The  right  thus  to  contract  cannot  be  interfered  with.  It 
is  part  and  parcel  of  personal  liberty,  and  therefore  under  the 

2  Munn  V.  Illinois,  supra. 


SEC.   IV.]  ECONOMIC   MONOPOLY.  79 

protection  of  section  30,  art.  2,  of  our  state  constitution,  and  of 
the  fourteenth  amendment  of  the  Constitution  of  the  United  States, 
as  heretofore  quoted.  [Cooley,  Const.  Lim.  9-14,  945;  lb.,  Torts, 
278;  State  v.  Loomis,  115  Mo.  307,  and  cases  cited;  State  v.  Julow, 
129,  Mo.  163,  and  cases  cited.  To  like  effect  see  Allgeyer  v. 
Louisiana,  165  U.  S.  589,  591 ;  Williams  v.  Fears,  21  Sup.  Ct.  Kep. 
128,  129,  130.] 

If  relator's  position  as  to  its  right  to  compel  respondent  to  turn 
over  to  it  the  results  of  its  labors  and  researches  after  news  is  cor- 
rect, then  by  the  same  token  any  citizen  could  compel  any  news- 
paper to  admit  him  as  a  subscriber;  or,  as  news  is  a  synonym  of 
information,  intelligence,  and  knowledge,  then  a  lawyer  profoundly 
versed  in  his  profession  could  be  compelled  to  yield  his  treasures 
of  erudition  to  some  less  fortunate  member  of  the  bar,  of  the  type 
described  by  Swift : 

"  Who  knows  of  law  nor  text  nor  margent. 
Calls  Singleton  his  brother  sargent." 

And,  even  if  the  business  of  respondent  can  Justly  be  deemed 
a  monopoly,  then  relator's  efforts  should  be  directed  towards  the 
destruction  of  that  monopoly,  and  not  towards  obtaining  the  man- 
date of  this  court  compelling  relator's  admission  into  that  "real 
genuine  article,"  as  counsel  are  pleased  to  designate  it. 

Conceding  respondent's  business  to  be  in  truth  a  monopoly  would 
furnish  an  all-sufficient  reason  and  answer  for  denying  the  relief 
relator  asks,  because  the  addition  of  one  more  monopolist  to  a 
monopolistic  organization  would  not  lessen  its  monopolistic  features, 
or  abate  its  vicious  tendencies.  But  there  is  nothing  here  on  which 
a  monopoly  can  attach.  The  business  is  one  of  mere  personal 
service;  an  occupation.  Unless  there  is  "  property  "  to  be  "  affected 
with  a  public  interest,"  there  is  no  basis  laid  for  the  fact  or  the 
charge  of  a  monopoly.  [See,  on  this  point  Morris  v.  Colman,  18 
Ves.  437  (per  Lord  Eldon)  ;  Mogul  S.  S.  Co.  v.  McGregor,  23 
Law  R.  Q.  B.  D.  598,  609  (per  Lord  Esher)  ;  Express  Cases,  117 
U.  S.  1,  21,  24;  Eailway  v.  Pullman  Car  Co.,  139  U.  S.  79,  89-91.] 

Nor  is  there  any  more  property  in  "  news,"  to  wit,  "  information,'^^ 
" intelligence,"  "knowledge,"  than  there  is  in  " the  viewless  winds," 
until  the  "guinea  stamp"  of  a  copyright  is  impressed  upon  its 
external  similitude,  thus  giving  it  one  of  the  elements  of  prop- 
erty, to  wit,  governmental  protection  for  a  limited  period.  That 
there  is  no  monopoly,  even  in  fact,  in  the  '  business  in  which 
respondent  is  engaged,  is  shown  in  the  clearest  possible  manner 
by  this  record.  Other  newsgathering  agencies  have  the  same 
facilities  over  the  wires  of  the  Western  Union  Telegraph  as  has 


80  BASES   OF   PUBLIC   SEKVICE   DUTIES,  [CHAP.   I. 

the  Associated  Press.  The  terms  of  the  telegraph  company  are 
uniform  as  to  all  organizations,  and  such  other  agencies  are 
at  work  in  their  occupation,  and,  it  would  seem,  with  great  suc- 
cess. Hundreds  of  daily  newspapers  in  every  quarter  of  the  Union, 
leaders  in  point  of  circulation  in  their  respective  localities,  look 
for  their  news  supplies  to  some  other  agency  than  that  of  respon- 
dent. Some  publishers  accustomed  to  receive  reports  from  respon- 
dent have  discontinued  their  business  relations  with  it,  and  gone 
to  some  rival  or  competing  organization.  The  New  York  Sun, 
repeatedly  urged  to  join  the  respondent,  has  continuously  declined. 
And  the  relator  company,  notwithstanding  the  allegations  of  its 
petition  that  its  paper  could  not  be  published  with  a  profit  without 
the  aid  of  the  Associated  Press,  Mr.  Lowenstein,  the  Stars  busi- 
ness manager,  gives  it  as  his  opinion  under  oath  that  "  the  Star 
prints  a  better  budget  of  news  than  any  of  its  rivals." 

For  the  purpose  of  obtaining  its  supplies  of  news  the  Star  is  affili- 
ated with  the  Xew  York  Sun  or  Laffan  News  Bureau,  and  concern- 
ing the  efficiency  of  that  service  Mr,  Laffan,  testifying,  says :  "  It 
has  no  equal  at  all,  from  our  point  of  view ; "  and,  answering  the 
question  whether,  "  as  a  matter  of  fact,  it  is  better  than  the  Asso- 
ciated Press  ?  "  answered,  "  Of  course  it  is ;  everybody  knows  that." 
And  Mr.  M.  E.  Stone,  general  manager  of  the  Associated  Press,  says 
that  the  Scripps-McEae  service  is  an  excellent  one. 

If  these  statements  are  to  be  taken  as  true,  and  so  they  will  be 
regarded  for  the  purpose  of  this  case,  relator  has  no  standing  in 
court,  because  Lord  Ellenborough,  in  the  Allnutt-Inglis  case,  supra, 
after  commenting  on  the  fact  that  the  London  Dock  Company's 
warehouses  were  the  only  places  where  wines  of  importers  could  be 
bonded,  went  on  to  say :  "  If  the  crown  should  hereafter  think  it 
advisable  to  extend  the  privilege  more  generally  to  other  persons  and 
places,  so  far  as  that  the  public  will  not  be  restrained  from  exercising 
a  choice  of  warehouses  for  the  purpose,  the  company  may  be 
enfranchised  from  the  restriction  which  attaches  upon  a  monopoly." 
[12  East,  loc.  cit.  540.] 

And  because,  further,  a  court  in  circumstances  as  above  related 
will  not  award  a  discretionary  writ  as  now  here  prayed  for  the  mere 
purpose  of  determining  an  empty  and  barren  technical  right  in 
behalf  of  a  petitioner,  it  will  "  let  well  enough  alone." 

Subsidiary  to  considerations  heretofore  mentioned  may  be  sug- 
gested others  tending  in  the  same  direction.  In  Mathews  v. 
Associated  Press  15  N.  Y.  Supp.  887,  defendant,  a  corpora- 
tion organized  under  the  act  "  to  incorporate  the  Associated  Press 
of  the  state  of  New  York"  (Laws  1867,  c.  754),  adopted  a  by- 
law prohibiting  its  members  from  receiving  or  publishing  "  the 


SEC.   IV,]  ECONOMIC   MONOPOLY.  81 

regular  news  dispatches  of  any  other  news  association  covering 
a  like  territory,  and  organized  for  a  like  purpose."  A  suspen- 
sion of  all  the  rights  and  privileges  of  the  association  was  pro- 
vided as  a  penalty  for  a  violation  of  said  provision.  In  an  action 
to  restrain  defendant  from  enforcing  this  penalty,  held  that  the 
association  had  jDOwer  to  enact  the  by-law;  that  it  was  not  ob- 
jectionable either  as  unreasonable  and  oppressive  or  as  tending  to 
restrain  trade  and  competition  and  to  create  a  monopoly. 

It  appeared  that,  w^hile  defendant  only  appoints  and  engages 
agents,  in  the  strict  sense  of  the  term,  in  the  state  of  New  York, 
by  virtue  of  contracts  with  other  associations,  it  receives  from  them 
news  collected  from  the  principal  portions  of  the  civilized  world. 
Plaintiffs  are  also  members  of,  and  they  publish  the  news  received 
from,  another  press  association,  which  collects  its  news,  by  its  own 
agents,  from  substantially  the  same  territory.  Held  further,  that 
this  action  of  plaintiffs  came  within  the  prohibition  of  the  by-law, 
and  authorized  defendant  to  enforce  the  penalty. 

The  court  in  general  term,  among  other  things,  said :  "  The  busi- 
ness of  collecting  the  news  of  the  day  and  furnishing  reports  of  it  to 
the  press  for  a  compensation  has  become  a  very  well  known  and 
important  industry.  It  can  scarcely  be  called  a  branch  of  trade. 
There  is  no  right  of  property  in  the  news  itself.  That  is  neither 
bought  nor  sold.  Any  man  who  hears  it  may  make  such  use  of  it 
as  he  can  for  his  own  advantage,  or  may  communicate  it  to  others. 
So  he  may  make  a  business  of  collecting  news,  and  furnishing 
reports  of  it  to  the  newspapers,  or  to  such  of  them  as  will  com- 
pensate him  for  his  trouble.  The  work  is  commonly  done  in  the 
locality  of  each  newspaper  by  its  own  reporters,  employed  and 
paid  for  that  purpose.  ...  In  this  case  the  agents  are  employed 
by  the  defendant,  the  Associated  Press  of  the  state  of  New  York, 
acting  for  all  the  publishers  who  are  comprised  in  its  member- 
ship. As  to  all  these  the  charter  and  by-laws  of  the  corpora- 
tion constitute  the  contract  between  themselves  and  between 
them  and  the  association.  Among  the  provisions  of  that  con- 
tract is  one  to  the  effect  that  none  of  the  members  shall  con- 
tract with  any  other  news  association  to  employ  for  them  agents 
for  the  procurement  of  news  within  the  same  territory  as  that 
in  which  agents  of  the  defendant  association  are  employed. 
This  contract  between  the  members  of  the  association  is  mutual, 
and  is  for  the  common  benefit,  and  so  is  supported  by  a  suffi- 
cient consideration.  It  is  for  the  common  benefit,  because  the 
efficiency  of  the  association  depends  upon  the  number  and  ac- 
tivity of  its  agents,  and  these  largely  upon  the  extent  of  its 
revenues,  from  which  salaries   are  paid,   and  that  in  turn  upon 


82  BASES   OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

the  niunber  of  its  patrons ;  so  the  building  up  of  competitors,  which 
must  draw  off  from  its  patronage,  will  necessarily  detract  from 
the  extent  and  value  of  its  work.  The  contract,  therefore,  of  the 
associates  with  each  other  and  of  those  with  the  association,  which 
is  embodied  in  the  by-law  in  question,  seems  to  us  not  to  exceed 
the  proper  bounds  of  self-protection,  and  not  to  be  unreasonable  nor 
obnoxious  to  any  principle  which  has  been  invoked  for  its  condemna- 
tion." 

This  ruling  of  the  supreme  court  was  unanimously  affirmed  by 
the  court  of  appeals,  Mr.  Justice  Peckham  delivering  the  opinion, 
who  afterwards  delivered  the  opinion  of  the  court  in  U.  S.  v. 
Trans-Missouri  Freight  Ass'n,  166  U.  S.  290. 

In  a  prior  case,  Dunlop's  Cable  News  Co.  v.  Stone  15  N.  Y.  Supp. 
2,  the  contention  was  made  that  news-gathering  was  a  "  public 
business." 

The  Cable  News  Company  was  a  corporation  engaged  in  col- 
lecting news  and  selling  the  same  to  all  newspapers  applying 
therefor.  The  New  York  Associated  Press  was  an  association 
of  newspaper  proprietors  also  engaged  in  the  business  of  collect- 
ing news  and  furnishing  it  to  newspapers.  The  association  had 
a  by-law  to  the  effect  that  none  of  its  members  should  take 
news  from  any  other  agencies.  For  violation  of  this  by-law  by  a 
number  of  publishers  the  association  threatened  to  discontinue  its 
service  to  them.  The  suit  was  to  enjoin  the  association  from  such 
proposed  action.  The  plaintiff  alleged  that  the  business  engaged 
in  by  the  parties  was  "a  public  business,  and  that  both  plaintiff 
and  the  said  New  York  Associated  Press  are,  therefore,  under  an 
obligation  to  serve  the  entire  public ;  and  that  it  is  essential  for  the 
proper  conduct  of  a  newspaper,  and  for  the  interests  of  its  readers, 
subscribers,  and  advertisers,  and  for  the  interest  of  the  public,  that 
such  newspaper  should  be  at  liberty  to  avail  itself  of  all  sources 
of  information,  and  combine,  if  it  think  best,  the  intelligence  and 
information  furnished  by  the  various  agencies  instituted  for  that 
purpose." 

A  motion  for  an  injunction  pendente  lite  was  denied.  On 
appeal  to  the  general  term  the  ruling  below  was  sustained.  The 
court  said :  "  The  plaintiff's  application  amounted  to  nothing 
more  nor  less  than  an  attempt  to  restrain  the  defendants  from 
transacting  their  lawful  business  in  their  own  way,  lest  in  doing 
so  plaintiff's  rival  business  should  be  injured  or  diminished.  The 
defendants  have  a  perfect  right  to  limit  the  sale  of  the  news  which 
they  collect  to  those  who  contract  to  deal  exclusively  with  them. 
They  are  private  individuals,  dealing,  it  is  true,  with  a  large  public, 
but  governed  by  no  corporate  duty  or  statutory  obligations.     They 


SEC.   IV.]  ECONOMIC   MONOPOLY.  83 

certainly  owe  no  duty  to  the  plaintiff,  which  is  a  foreign  corporation 
attempting  to  compete  with  them,  and  with  whom  they  have  no 
privity  or  relations  of  any  kind." 

In  the  latter  case  the  defendant  association  was  not  incorporated, 
in  the  former  it  was;  but  botli  cases  were  treated  alike  in  this  respect. 

And  it  has  been  determined  that :  "  A  voluntary  association, 
whether  incorporated  or  not,  has,  within  certain  well-defined 
limits,  power  to  make  and  enforce  by-laws  for  the  government 
of  its  members.  Such  by-laws  are  ordinarily  matters  between 
the  association  and  its  members  alone,  and  with  which  strangers 
have  no  concern."  [Live-Stock  Commission  Co.  v.  Live-Stock 
Exch.,  143  111.  210.] 

The  charter  of  respondent,  after  emendation,  is  couched  in  these 
words :  "  The  object  for  which  it  is  formed  is  to  buy,  gather,  and 
accumulate  information  and  news;  to  vend,  supply,  distribute,  and 
publish  the  same."  Under  the  terms  of  its  charter  respondent  owes 
no  duty  to  relator,  since  it  possesses  no  greater  right  in  regard  to 
the  gathering  and  purchase,  etc.,  of  news  than  its  incorporators 
possessed  as  individuals  before  the  act  of  incorporation.  (Au- 
thorities supra.)  But  on  the  basis  that  the  charter,  by-laws,  etc., 
place  respondent  on  the  plane  of  any  other  corporation  in  charge  of 
a  "public  utility,"  relator  asserts  that  respondent's  business  is  to 
be  regarded  in  the  same  light  precisely  as  a  railroad,  telegraph, 
or  telephone  company;  that  it  involves  a  public  franchise.  But 
in  Live-Stock  Commission  Co.  v.  Live-Stock  Exch.,  supra,  it  was 
ruled  that :  The  mere  fact  that  the  business  of  a  particular 
market  owned  by  a  private  corporation  has  become  so  large  as  to 
influence  the  commerce  of  a  large  section  of  tlie  country  will  not 
give  the  courts  any  power  to  declare  such  market  public,  and  im« 
pressed  with  a  public  use,  or  to  apply  to  it  any  rules  of  public 
policy  peculiar  to  that  class  of  markets.  That  power  belongs  alone 
to  the  legislative  department  of  the  state.  [See  Express  Cases, 
supra;  Eailroad  v.  Eailroad,  41  Fed.  Eep.  559,  569  (Per  Caldwell, 
J.)  ;  Interstate  Commerce  Commission  v.  Kailway,  167  U.  S.  479, 
499;  Eailway  v.  Central  Stock  Yards  Co.,  45  N.  Y.  Eq.  50.] 

In  making  this  ruling,  not  only  was  Munn's  case  on  the  point 
involved,  cited  with  approval,  but,  in  addition  thereto,  Ladd  v. 
Southern  Cotton  Press  Co.,  53  Tex,  172,  was  cited,  and  its  lan- 
guage approvingly  quoted : 

"  We  know  of  no  authority,  and  none  has  been  shown  us,  for 
saying  that  a  business  strictly  juris  privati  will  become  jwis  publici 
merely  by  reason  of  its  extent.  If  the  magnitude  of  a  particular 
business  is  such,  and  the  persons  -  affected  by  it  are  so  numerous, 
that  the  interests  of  society  demand  that  the  rules  and  principles 


84  BASES    OF   PUBLIC    SERVICE   DUTIES,  [CHAP.    I. 

applicable  to  public  employments  should  be  applied  to  it,  this  would 
have  to  be  done  by  the  legislature  (if  not  restrained  from  doing  so 
by  the  constitution),  before  a  demand  for  such  use  could  be  en- 
forced by  the  courts." 

It  is  not  pretended  here  that  such  legislation  would  make  re- 
spondent corporation's  business  juris  publici  has  been  enacted,  grant- 
ing that  such  legislation  could  have  any  extraterritorial  effect  (as 
to  which  see  Vawter  v.  Eailroad  Co.,  84  Mo.  679 ;  State  v.  Gritzner, 
134  Mo.  512,  and  cases  cited;  Harris  v.  White,  81  N.  Y.,  loc.  cit. 
544). 

It  is  needless  to  discuss  in  this  connection  cases  which  bring  into 
view  the  duties  of  railroad,  telegraph,  and  telephone  companies, 
since,  those  companies  having  accepted  legislative  favors,  right  of 
eminent  domain,  etc.,  must  shoulder  the  burdens  along  with  the 
benefits,  and  their  business  becomes  by  such  acceptance  ipso  facto 
publici  juris.  Not  so,  however,  with  respondent,  which  was  granted 
no  privileges,  asks  none,  and  cannot,  therefore,  be  burdened  with 
conditions  such  as  pertain  to  common  carriers  and  the  like. 

As  to  the  case  of  Minnesota  Tribune  Co.  v.  Associated  Press,  83 
Fed.  350,  it  seems  to  recognize  the  validity  of  such  contracts  by 
the  Associated  Press  as  are  the  subject  of  complaint  here.  But,  if 
this  is  not  so,  we  prefer  the  ruling  and  reasoning  on  this  point  in 
Mathews'  Case. 

In  regard  to  New  York  &  Chicago  Grain  &  Stock  Exch.  v. 
Board  of  Trade  of  City  of  Chicago,  137  111.  153,  much  relied 
on  by  relator:  For  many  years  the  board  of  trade  had  been 
accustomed  to  furnish  to  all  customers  the  telegraphic  reports 
as  to  daily  and  hourly  conditions  of  the  grain  and  other  mar- 
j^ets.  Having  done  so  for  such  a  long  time,  it  undertook  sud- 
denly to  disrupt  those  long-continued  business  relations,  and 
leave  the  plaintiff,  a  corporation  engaged  in  the  commission  busi- 
ness, without  any  means  of  conducting  its  ordinary  and  long- 
established  business;  and  upon  this  basis  it  was  very  properly 
held  that  plaintiff  was  entitled  to  injunction  to  prevent  the  threat- 
ened disruption  of  business.  This  was  the  very  gist  of  the  de- 
cision in  that  case,  and  we  need  not  say  whether  we  fully  indorse 
much  of  the  language  and  of  the  reasoning  used  in  arriving  at  the 
conclusion  reached;  and  this  reason,  among  others,  occurs  why  we 
need  not,  and  that  is,  respondent  has  never  entered  into  business 
relations  with  relator,  and  consequently  there  are  no  such  relations 
to  be  severed,  and  no  such  injurious  results  can  occur  in  this  case 
as  in  the  one  referred  to. 

Eelative  to  the  recent  decision  by  the  supreme  court  of  Illinois 
in  Inter-Occan  Pub.  Co.  v.  Associated  Press,  to  which  our  atten- 


SEC.    IV.]  ECOXOMIC    MONOPOLY.  85 

tion  has  been  called,  the  Inter-Ocean  Company  was  engaged  in 
publishing  two  newspapers  in  Chicago,  the  Daily  and  the  Weeldy 
Inter-Ocean.     A   contract  was   entered   into   between  the   parties 
as  to  furnishing  news  in  accordance  with  the  by-laws  of  the  As- 
sociated Press.     This  contract  the  Inter-Ocean  Publishing  Com- 
pany violated  by  procuring  and  publishing  news  obtained  from 
other  news  concerns  located  in  the  city  of  New  York.     Being 
notified  by  the  Associated  Press  to  appear  to  answer  such  charges 
of   violation   of   contract,   the   Inter-Ocean   Publishing   Company 
resorted  to  injunction  to  prevent  expulsion  for  violation  of  the  by- 
laws of  the  Associated  Press,  which  formed  part  and  parcel  of  the 
contract  between  the  parties.     The  Inter-Ocean  Publishing  Company 
admitted  in  its  bill  for  injunction  that  it  had  violated  its  contract, 
and,  seemingly  by  way  of  excuse,  alleged  that  it  could  not  obtain 
all  the  news  from  the  other  contracting  party,  and  so  was  forced 
to  engage  the  services  of  other  news-gathering  associations.     Answer 
was  filed,  and,  upon  hearing  had,  the  bill  was  dismissed  for  want 
of  equity,  and  this  decree  was  affirmed  in  the  appellate  court. 
But  when  the  cause  reached  the  supreme  court  the  decrees  of  the 
lower  courts  were  reversed,  and  the  cause  remanded,  with  directions 
to  enter  a  decree  as  prayed.     The  rulings  in  that  case  were:     (1) 
The  by-law  and  contract  created  a  monopoly.     (3)   That  it  was 
necessary  to  publish  news  from  other  sources  to  make  a  check  on 
the  defendant.     (3)  That  the  by-law  tends  to  restrict  competition, 
because  it  prevents  members  from  purchasing  news  from  any  other 
source,      (-i)  That  the  contract  and  by-law  are  void,  as  being  beyond 
the  power  of  the  defendant  to  make.     (5)   That  the  "obligation 
[of  the   defendant]    to   serve   the   public   is   one   not   resting  on 
contract,  but  grows  out  of  the  fact  that  it  is  in  the  discharge  of  a 
public  duty,  or  a  private  duty  which  has  been  so  conducted  that 
public  interest  has  attached  thereto."     And  (G)  that  the  fact  that 
the  defendant  possessed  the  right  to  use  the  power  of  eminent 
domain  as  to  telegraph  and  telephone  lines,  although  not  exercised, 
contributed  to  determine  the  character  of  its  corporate  organization. 
And  on  these  grounds  was  based  the  ruling  that  the  defendant 
must  furnish  every  one  applying  with  the  same  service  of  news. 
The  above  decision  is  evidently  at  war  with  the  rulings  in  the  Live- 
stock Commission   case,  supra,  where  "the  amount  of  business 
annually  transacted  at  said  stock  yards  is  such  as  to  constitute  the 
market  thus  established  the  largest  live-stock  market  in  the  world." 
If  the  facts  just  related  did  not  impress  the  business  with  a  public 
use,  it  is  difficult  to  conceive  what  facts  could  do  so ;  and,  in  addi- 
tion to  the  utterances  heretofore  quoted  in  the  Live- Stock  Commis- 
sion case,  the  court  there  also  said :     "  The  views  here  expressed 


8G  BASES    OF   PUBLIC    SERVICE   DUTIES.  [CHAP.    I. 

do  not  conflict  with  what  was  decided  in  Munn  v.  Illinois,  94 
U.  S.  113.  The  question  raised  and  decided  in  that  case  was 
as  to  the  constitutionality  of  the  act  of  the  legislature  of  this 
state  declaring  certain  grain  elevators  to  be  public  warehouses, 
and  prescribing  rules  for  their  management,  and  fixing  maximum 
charges  for  the  storage  and  handling  of  gi-ain.  There  the  legislative 
department  ^ad  iriterposed,  and  declared  the  public  use;  and  the 
court,  in  holding  tne  act  constitutional,  held  merely  that  the  legisla- 
tive power  had  been  properly  exercised.  This  was  the  only  ques- 
tion having  any  relevancy  here  presented  in  that  case,  or  which 
the  court  undertook  to  decide;  and  the  discussion  of  the  evidence 
showing  that  the  business  carried  on  in  said  grain  elevators  was  of 
such  character  that  it  had  in  fact  become  impressed  with  a  public 
use  was  only  for  the  purpose  of  showing  that  a  condition  of  things 
existed  which  justified  the  legislature  in  passing  the  statute  then 
under  consideration.''     [143  111.,  loc.  cit.  239.] 

That  case  clearly  announces  that  it  is  necessary  in  cases  like  the 
present  one  that  the  Legislature  should  declare  that  the  business 
"  had  in  fact  become  impressed  with  a  public  use " ;  something 
which,  as  there  stated,  the  courts  were  powerless  to  declare.  But 
that  case  was  wholly  ignored  in  the  case  under  comment. 

For  these  reasons,  besides  those  already  given  during  the  course 
of  this  investigation,  we  decline  to  follow  that  case  or  regard  its 
rulings  authoritative. 

Moved  by  these  considerations,  we  deny  the  peremptory  writ. 
All  concur. 


u 


CHAPTER  II. 
THE  SERVICE  TO  BE  REND^^^pED. 

Section  1. 

"What  Service  Must  Be  Rendered. 

FISH  V.  CHAPMAN. 

2   Ga.   349.     1&47.^ 

NiSBiT,  J.,  delivered  the  opinion  of  the  court. 

The  Court  below  decided  that  the  plaintiff  in  error  under  his 
contract  with  Chapman  &  Eoss  was  a  common  carrier,  to  which 
opinion  he  excepts.  The  evidence  upon  this  point  is  the  contract 
and  nothing  more.  It  does  not  appear  that  carrying  was  his  habitual 
business;  all  that  does  appear  from  the  record  is,  that  he  under- 
took upon  a  special  contract,  and  upon  this  occasion,  to  haul  on 
his  own  wagon  for  a  comj)ensation  specified,  the  goods  of  the 
defendants  from  the  then  terminus  of  the  Central  Rail  Eoad  to 
the  city  of  Macon.  Does  such  an  undertaking  make  him  a  com- 
mon carrier?  That  is  the  question,  and  we  are  inclined  to  answer 
it  in  the  negative.  A  common  carrier  is  one  who  undertakes  to 
transport  from  place  to  place  for  hire,  the  goods  of  such  persons 
as  think  fit  to  employ  him.  Such  is  a  proprietor  of  wagons,  barges, 
lighters,  merchant  ships,  or  other  instruments  for  the  public  con- 
veyance of  goods.  See  Mr.  Smith's  able  commentary  on  the  case 
of  Coggs  V.  Bernard,  1  Smith  Leading  Cases,  172;  Forward  v. 
Pittard,  1  T.  R.  27 ;  Morse  v.  Slew,  2  Lev.  69 ;  1  Vent.  190,  238 ; 
Rich  V.  Kneeland,  Cro.  Jac.  330;  Maving  v.  Todd,  1  Stark,  72; 
Brook  V.  Pickwick,  1  Bing.  R.  218.  Railway  companies  are  com- 
mon carriers.  Palmer  v.  Grand  Junction  Canal  Co.,  4  M.  &  W. 
R.  749. 

"Common  carriers  (says  Chancellor  Kent),  undertake  generally 
and  for  all  people  indifferently,  to  convey  goods  and  deliver  them  at 
a  place  appointed,  for  hire,  and  with  or  without  a  special  agreement 
as  to  price."     2  Kent,  598. 

A  common  carrier  is  bound  to  convey  the  goods  of  any  person 
offering  to  pay  his  hire  unless  his  carriage  be  already  full,  or  the 

1  The  statement  of  facts,  arguments  of  counsel  and  parts  of  the  opinion 
are  omitted. —  Eu. 


gg  THE   SERVICE   TO   BE   RENDERED.  [CHAP.    11^ 

risk  sought  to  be  imposed  upon  him  extraordinary,  or  unless  the 
goods  be  of  a  sort  which  he  cannot  convey,  or  is  not  in  the  habit  of 
conveying.  Jackson  v.  Rogers,  2  Show.  337 ;  Riley  v.  Home,  5  Bing. 
R  217;  Lane  v.  Cotton,  1  Ld.  Ray.  R.  646;  Edwards  v.  Sheratt, 
1  East.  R.  604;  Batson  v.  Donovan,  1  B.  &  A.  R.  32;  2  Kent,  598; 
Elsee  V.  Gatwood,  5  T.  R.  143;  1  Pick.  R.  50;  2  Sumner  R.  221; 
Story  on  Bail.  322,  323;  Dudley  S.  C.  Law  and  Eq.  R.  159. 

It  is  from  these  definitions  and  from  the  two  propositions  stated, 
that  we  are  to  determine  what  constitutes  a  person  a  common  carrier. 
I  infer  then  that  the  business  of  carrying  must  be  hahitual  and  not 
casual.  An  occasional  undertaking  to  carry  goods  will  not  make  a 
person  a  common  carrier;  if  it  did,  then  it  is  hard  to  determine 
who,  in  a  planting  and  commercial  community  like  ours,  is  not  one ; 
there  are  few  planters  in  our  own  State  owning  a  wagon  and 
team,  who  do  not  occasionally  contract  to  carry  goods.  It  would 
be  contrary  to  reason,  and  excessively  burdensome,  nay,  enormously 
oppressive,  to  subject  a  man  to  the  responsibilities  of  a  common 
carrier,  who  might  once  a  year  or  oftener  at  long  intervals,  con- 
tract to  haul  goods  from  one  point  in  the  State  to  another.  Such 
a  rule  would  be  exceedingly  inconvenient  to  the  whole  community, 
for  if  established,  it  might  become  difficult  in  certain  districts  of 
our  State  to  procure  transportation. 

The  undertaking  must  be  general  and  for  all  people  indifferently. 
The  undertaking  may  be  evidenced  by  the  carrier's  own  notice,  or 
practically  by  a  series  of  acts,  by  his  known  habitual  continuance 
in  this  line  of  business.  He  must  thus  assume  to  be  the  servant  of 
the  public,  he  must  undertake  for  all  people.  A  special  undertaking 
for  one  man  does  not  make  a  wagoner,  or  anybody  else,  a  common 
carrier.  I  am  very  well  aware  of  the  importance  of  holding  wagon- 
ers in  this  country  to  a  rigid  accountability;  they  are  from  neces- 
sity greatly  trusted,  valuable  interests  are  committed  to  them,  and 
they  are  not  always  of  the  most  careful,  sober  and  responsible  class 
of  our  citizens.  Still  the  necessity  of  an  inflexible  adherence  to  gen- 
eral rules  we  cannot  and  wish  not  to  escape  from.  To  guard  this 
point  therefore,  we  say,  that  he  who  follows  wagoning  for  a  liveli- 
hood, or  he  who  gives  out  to  the  world  in  any  intelligible  way  that 
he  will  take  goods  or  other  things  for  transportation  from  place  to 
place,  whether  for  a  year,  a  season,  or  less  time,  is  a  common  carrier 
and  subject  to  all  his  liabilities. 

^Qne  of  the  obligations  of  a  common  carrier,  as  we  have  seen,  is 
to  carry  the  goods  of  any  person  offering  to  pay  his  hire ;  with  cer- 
tain specific  limitations  this  is  the  rule.  If  he  refuse  to  carry,  he 
is  liable  to  be  sued,  and  to  respond  in  damages  to  the  person  ag- 
grieved, and  this  is  perhaps  the  safest  test  of  his  character.     By 


SEC.    I.]  WHAT   SERVICE   MUST   BE   KEXDERED.  89 

this  test  was  Mr.  Fish  a  common  carrier  ?  There  is  no  evidence  to 
make  him  one  but  his  contract  with  Chapman  &  Eoss.  Suppose 
that  after  executing  this  contract,  anotlier  application  had  been 
made  to  him  to  carry  goods,  which  he  refused,  could  he  be  made 
liable  in  damages  for  such  refusal  upon  this  evidence?  Clearly 
not.  There  is  not  a  case  in  the  iDooks,  but  one  to  which  I  shall 
presently  advert,  which  would  make  him  liable  upon  proof  of  a 
single  carrying  operation. 

/Upon  these  views  we  predicate  the  opinion,  that  the  plaintiff 
in  error  was  not  a  common  carrier.  From  the  way  in  which  the 
opinion  of  the  court  is  expressed  in  the  bill  of  exceptions,  I  am  left 
somewhat  in  doubt  whether  the  able  judge  presiding  in  this  cause, 
intended  to  say  that  the  plaintiff  in  error  was  a  common  carrier,  or 
that  under  his  contract  he  was  liable  as  such.  If  the  former,  we 
think  he  erred;  and  if  the  latter,  as  we  shall  more  fully  show,  we 
think  with  him.  In  either  event  we  shall  not  send  the  case  back; 
for  if  he  meant  to  say  that  the  plaintiff  upon  general  principles  was 
a  common  carrier,  thinking  as  we  do  that  he  is  liable  under  this 
contract  as  such,  he  will  not  be  benefited  by  the  case's  going 
back. 

In  conflict  with  these  views,  it  has  been  held  in  Pennsylvania, 
that  "  a  wagoner  who  carries  goods  for  hire,  is  a  common  carrier, 
whether  transportation  be  his  principal  and  direct  business,  or  an 
occasional  and  incidental  employment."  Gibsox,  Chief  Justice,  in 
Gordon  v.  Hutchinson,  1  Watts  &  Serg.  E.  285.  This  decision  no 
doubt  contemplates  an  undertaking  to  carry  generally  without  a 
special  contract,  and  does  not  deny  to  the  undertaker  the  right  to 
define  his  liability.  There  are  cases  in  Tennessee  and  Xew  Hamp- 
shire which  favour  the  Pennsylvania  rule,  but  there  can  be  but  little 
doubt  that  that  case  is  opposed  to  the  principles  of  the  common  law, 
and  its  rule  wholly  inexpedient.  See  Story  on  Bail.  sees.  457,  495 ; 
Bac.  Ab.  Carrier  A.;  2  Bos.  &  Pul.  417;  4  Taunt.  787;  Jones  Bail. 
121 ;  1  Wend.  E.  272 ;  6  Taunt.  E.  577 ;  2  Kent,  597. 


THE  CITIZEXS'  BAXK  v.  THE  XAXTUCKET 
STEAMSHIP  CO. 

2   Story,   16.     1841.^ 

Story,  J,-  This  cause  has  come  before  the  Court  under  circum- 
stance, involving  some  points  of  the  first  impression  here,  if  not 
of  entire  novelty ;  and  it  has  been  elaborately  argued  by  the  counsel 

1  The  statement  of  facts  and  arguments  of  counsel,  as  well  as  a  part  of 
the  opinion  dealing  with  questions  of  evidence,  are  omitted. —  Ed. 


90  THE    SERVICE   TO   BE   RENDERED.  [CHAP.    II. 

on  each  side  on  all  the  matters  of  law,  as  well  as  of  fact,  involved 
in  the  controversy.  I  have  given  them  all  the  attention,  both  at 
the  argument  and  since,  which  their  importance  has  demanded, 
and  shall  now  proceed  to  deliver  my  own  judgment. 

The  suit  is  in  substance  brought  to  recover  from  the  Steamboat 
Company  a  sum  of  money,  in  bank  bills  and  accounts,  belonging 
to  the  Citizens'  Bank,  which  was  intrusted  by  the  cashier  of  the 
bank  to  the  master  of  the  steamboat,  to  be  carried  in  the  steamboat 
from  the  Island  of  Nantucket  to  the  port  of  Xew  Bedford,  across 
the  intermediate  sea,  which  money  has  been  lost,  and  never  duly 
delivered  by  the  master.  The  place  where,  and  the  circumstances 
under  which  it  was  lost,  do  not  appear  distinctly  in  the  evidence; 
and  are  no  otherwise  ascertained,  than  by  the  statement  of  the 
master,  who  has  alleged  that  the  money  was  lost  by  him  after 
his  arrival  at  New  Bedford,  or  was  stolen  from  him;  but  exactly 
how  and  at  what  time  he  does  not  know.  The  libel  is  not  in  rem, 
but  in  personam,  against  the  Steam  Boat  Company  alone;  and  no 
question  is  made  (and  in  my  judgment  there  is  no  just  ground 
for  any  such  question),  that  the  cause  is  a  case  of  admiralty  and 
maritime  jurisdiction  in  the  sense  of  the  Constitution  of  the  United 
States,  of  which  the  District  Court  had  full  jurisdiction;  and, 
therefore,  it  is  properly  to  be  entertained  by  this  Court  upon  the 
appeal. 

There  are  some  preliminary  considerations  suggested  at  the 
argument,  which  it  may  be  well  to  dispose  of,  before  we  consider 
those,  which  constitute  the  main  points  of  the  controversy.  In  the 
first  place,  there  is  no  manner  of  doubt,  that  steamboats,  like 
other  vessels,  may  be  employed  as  common  carriers,  and  when  so 
employed  their  owners  are  liable  for  all  losses  and  damages  to  goods 
and  other  property  intrusted  to  them  as  common  carriers  to  the 
same  extent  and  in  the  same  manner,  as  any  other  common  carriers 
by  sea.  But  whether  they  are  so,  depends  entirely  upon  the  nature 
and  extent  of  the  employment  of  the  steamboat,  either  express  or 
implied,  which  is  authorized  by  the  owners.  A  steamboat  may  be 
employed,  although  I  presume  it  is  rarely  the  case,  solely  in  the 
transportation  of  passengers ;  and  then  the  liability  is  incurred  only 
to  the  extent  of  the  common  rights,  duties  and  obligations  of 
carrier  vessels  of  passengers  by  sea,  and  carrier  vehicles  of  passengers 
on  land;  or  they  may  be  employed  solely  in  the  transportation  of 
goods  and  merchandise,  and  then,  like  other  carriers  of  the  like 
character  at  sea  and  on  land,  they  are  bound  to  the  common  duties, 
obligations  and  liabilities  of  common  carriers.  Or  the  employ- 1 
ment  may  be  limited  to  the  mere  carriage  of  particular  kinds  of 
property  and  goods ;  and  when  this  is  so,  and  the  fact  is  known  and 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  91 

avowed,  the  owners  will  not  be  liable  as  common  carriers  for  anj'-/ 
other  goods  or  property  intrusted  to  their  agents  without  their  • 
consent.  The  transportation  of  passengers  or  of  merchandise,  or 
of  both,  does  not  necessarily  imply,  that  the  owners  hold  them- 
selves out  as  common  carriers  of  money  or  bank  bills.  It  has  never 
been  imagined,  I  presume,  that  the  owners  of  a  ferry  boat,  whose 
ordinary  employment  is  merely  to  carry  passengers  and  their  lug- 
gage, would  be  liable  for  the  loss  of  money  intrusted  for  carriage 
to  the  boatmen  or  other  servants  of  the  owners,  where  the  latter 
had  no  knowledge  thereof,  and  received  no  compensation  therefor. 
In  like  manner  the  owners  of  stage-coaches,  whose  ordinary  em- 
ployment is  limited  to  the  transportation  of  passengers  and  their 
luggage,  would  not  be  liable  for  parcels  of  goods  or  merchandise 
intrusted  to  the  boatman  employed  by  them  to  be  carried  from 
one  place  to  another  on  their  route,  where  the  owners  receive  no 
compensation  therefor,  and  did  not  hold  themselves  out  as  common 
carriers  of  such  parcels.  A  fortiori,  they  would  not  be  liable  for 
the  carriage  of  parcels  of  money,  or  bank  bills,  under  the  like  cir- 
cumstances. So,  if  money  should  be  intrusted  to  a  common  wagoner 
not  authorized  to  receive  it  by  the  ordinary  business  of  his  employ- 
ers and  owners,  at  their  risk,  I  apprehend,  that  they  would  not 
be  liable  for  the  loss  thereof  as  common  carriers,  any  more 
than  they  would  be  for  an  injury  done  by  his  negligence,  to  a 
passenger,  whom  he  had  casually  taken  up  on  the  road.  In  all 
these  cases,  the  nature  and  extent  of  the  employment  or  business, 
which  is  authorized  by  the  owners  on  their  own  account  and  at 
their  own  risk,  and  which  either  expressly  or  impliedly  they  hold 
themselves  out  as  undertaking,  furnishes  the  true  limits  of  their 
rights,  obligations,  duties  and  liabilities.  The  question,  therefore, 
in  all  cases  of  this  sort  is,  what  are  the  true  nature  and  extent 
of  the  employment  and  business,  in  which  the  owners  hold  them- 
selves out  to  the  public  as  engaged.  They  may  undertake  to  be 
common  carriers  of  passengers,  and  of  goods  and  merchandise,  and 
of  money;  or,  they  may  limit  their  employment  and  business  to 
the  carriage  of  any  one  or  more  of  these  particular  matters.  Our 
steamboats  are  ordinarily  employed,  I  believe,  in  the  carriage,  not 
merely  of  passengers,  but  of  goods  and  merchandise,  including 
specie,  on  freight;  and  in  such  cases  the  owners  will  incur  the  lia- 
bilities of  common  carriers  as  to  all  such  matters  within  the  scope 
of  their  employment  and  business.  But  in  respect  to  the  carriage 
of  bank  bills,  perhaps  very  different  usages  do,  or  at  least  may, 
prevail  in  different  routes,  and  different  ports.  But,  at  all  events,  I 
do  not  see,  how  the  Court  can  judicially  say,  that  steamboat  owners 
are  either  necessarily  or  ordinarily  to  be  deemed,  in  all  cases,  com- 


92  THE   SERVICE   TO   BE   RENDERED.  [CHAP.    II. 

mon  carriers,  not  only  of  passengers,  but  of  goods  and  merchandise 
and  money  on  the  usual  voyages  and  routes  of  their  steamboats; 
but  the  nature  and  extent  of  the  employment  and  business  thereof 
must  be  established  as  a  matter  of  fact  by  suitable  proofs  in  each 
particular  case.  Such  proofs  have,  therefore,  been  very  properly  re- 
sorted to  upon  the  present  occasion. 

In  the  next  place,  I  take  it  to  be  exceedingly  clear,  that  no  person 
is  a  common  carrier  in  the  sense  of  the  law,  who  is  not  a  carrier 
for  hire ;  that  is,  who  does  not  receive,  or  is  not  entitled  to  receive, 
any  recompense  for  his  services.  The  known  definition  of  a  com- 
mon carrier,  in  all  our  books,  fully  establishes  this  result.  If  no 
hire  or  recompense  is  payable  ex  debito  justiticc,  but  something  is 
bestowed  as  a  mere  gratuity  or  voluntary  gift,  then,  although  the 
party  may  transport  either  persons  or  property,  he  is  not  in  the 
sense  of  the  law  a  common  carrier ;  but  he  is  a  mere  mandatary,  or 
gratuitous  bailee ;  and  of  course  his  rights,  duties  and  liabilities  are 
of  a  very  different  nature  and  character  from  those  of  a  common 
carrier.  In  the  present  case,  therefore,  it  is  a  very  important  in- 
quiry, whether  in  point  of  fact  the  respondents  were  carriers  of 
money  and  bank  notes  and  checks  for  hire  or  recompense,  or  not. 
I  agree,  that  it  is  not  necessary,  that  the  compensation  should  be 
a  fixed  sum,  or  known  as  freight;  for  it  will  be  sufficient  if  a  hire 
or  recompense  is  to  be  paid  for  the  service,  in  the  nature  of  a 
qtiantunh  meruit,  to  or  for  the  benefit  of  the  Company.  And  I 
farther  agree,  that  it  is  by  no  means  necessary,  that  if  a  hire  or 
freight  is  to  be  paid,  the  goods  or  merchandise  or  money  or  other 
property  should  be  entered  upon  any  freight  list,  or  the  contract  be 
verified  by  any  written  memorandum.  But  the  existence  or  non- 
existence of  such  circumstances  may  nevertheless  be  very  important 
ingredients  in  ascertaining,  what  the  true  understanding  of  the 
parties  is,  as  to  the  character  of  the  bailment. 

In  the  next  place,  if  it  should  turn  out,  that  the  Steamboat  Com- 
pany are  not  to  be  deemed  common  carriers  of  money  and  bank 
bills;  still,  if  the  master  was  authorized  to  receive  money  and  bank 
bills  as  their  agent,  to  be  transported  from  one  port  of  the  route 
of  the  steamboat  to  another  at  their  risk,  as  gratuitous  bailees, 
or  mandataries,  and  he  has  been  guilty  of  gross  negligence  in  the 
performance  of  his  duty,  whereby  the  money  or  bank  bills  have 
been  lost,  the  Company  are  undoubtedly  liable  therefor,  unless 
such  transportation  be  beyond  the  scope  of  their  charter;  upon  the 
plain  ground,  that  they  are  responsible  for  the  gross  negligence 
of  their  agents  within  the  scope  of  their  employment. 

Having  stated  these  preliminary  doctrines,  which  seem  neces- 
sary to  a  just  understanding  of  the  case,  we  may  now  proceed 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  93 

to  a  direct  consideration  of  the  merits  of  the  present  controversy. 
And  in  my  judgment,  although  there  are  several  principles  of 
law  involved  in  it,  yet  it  mainly  turns  upon  a  matter  of  fact, 
namely,  whether  the  Steamboat  Company  were,  or  held  them- 
selves out  to  the  public  to  be,  common  carriers  of  money  and  bank 
bills,  as  well  as  of  passengers  and  goods  and  merchandises,  in  the 
strict  sense  of  the  latter  terms ;  or  the  employment  of  the  steamboat 
was,  so  far  as  the  Company  are  concerned,  limited  to  the  mere 
transportation  of  passengers  and  goods  and  merchandises  on  freight 
or  for  hire;  and  money  and  bank  bills,  although  known  to  the 
Company  to  be  carried  by  the  master,  were  treated  by  them,  as  a 
mere  personal  trust  in  the  master  by  the  owners  of  the  money  and 
bank  bills,  as  their  private  agent,  and  for  which  the  Company  never 
held  themselves  out  to  the  public  as  responsible,  or  as  being  within 
the  scope  of  their  employment  and  business  as  carriers. 

The  question  has  been  made  at  the  bar,  upon  whom  in  this  case 
the  burthen  of  proof  lies  to  establish,  that  the  Company  were 
common  carriers  of  money  or  bank  bills,  or  not.  It  does  not  ap- 
pear to  me  to  be  of  any  great  importance  in  the  actual  posture  of 
the  present  case,  how  that  matter  is  decided.  But  I  have  no  doubt, 
that  the  onu^s  prohandi  is  upon  the  libellants  to  establish  the  affirma- 
tive; for  until  that  is  done,  no  liability  can  attach  to  the  respon- 
dents ;  and  the  libellants  are  bound  to  establish  a  prima  facie  case ; 
and  indeed  it  is  scarcely  within  the  rules  of  evidence  to  call  upon 
the  respondents  to  establish  the  negative.  But  it  seems  to  me  the 
less  necessary  to  sift  this  matter,  since  the  evidence  on  the  part  of 
the  libellants  is  in  my  judgment  sufficient  to  establish  such  a  prima 
facie  case,  at  least  to  the  extent  of  a  compliance  with  the  ex- 
igency of  the  rule. 

It  is  abundantly  proved,  that  the  masters  of  the  steamboat  have 
been  constantly  and  habitually  employed  in  the  transportation  of 
money  and  bank  bills  for  banks  and  private  persons  (as  indeed  com- 
mon packet  masters  were  likewise  employed  long  before  steamboats 
existed)  upon  this  very  route,  and  upon  the  common  routes  from' 
Nantucket  to  other  ports.  This  usage,  or  practice,  or  employment 
(call  it  which  we  may),  was  so  notorious,  that  it  must  be  presumed 
to  be  known  to  the  Steamboat  Company;  and  indeed,  that  fact  is 
not  contraverted.  Under  such  circumstances  the  natural  inferenc^ 
would  be,  that  the  transportation  of  money  and  bank  bills  wafe 
within  the  scope  of  the  usual  employment  of  the  master  in  his  officiaJL 
capacity,  and  on  account  and  at  the  risk  of  the  owners,  unless  t\\\ 
inference  were  repelled  by  other  circumstances.  The  onus  probandi 
then,  of  disproving  this  inference,  may  be  deemed  to  be  fairly 
shifted  upon  the  respondents. 


94  THE   SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

The  ground  of  the  defence  of  the  Company  is,  that  in  point 
of  fact,  although  the  transportation  of  money  and  bank  bills  by  the 
master  was  well  known  to  them,  yet  it  constituted  no  part  of  their 
own  business  or  employment ;  that  they  never  were  in  fact  common 
carriers  of  money  or  bank  bills;  that  they  never  held  themselves 
out  to  the  public  as  such,  and  never  received  any  compensation 
therefor;  that  the  master  in  receiving  and  transporting  money  and 
bank  bills  acted  as  the  mere  private  agent  of  the  particular  parties, 
who  intrusted  the  same  to  him,  and  not  as  the  agent  of  the  Com- 
pany or  by  their  authority;  that  in  truth  he  acted  as  a  mere  gra- 
tuitous bailee  or  mandatary  on  all  such  occasions;  and  even  if  he 
stipulated  for,  or  received,  any  hire  or  compensation  for  such 
services,  he  did  so,  not  as  the  agent  of  or  on  account  of  the  Com- 
pany, but  on  his  own  private  account,  as  a  matter  of  agency  for 
the  particular  bailors  or  mandators.  Now,  certainly,  if  these  mat- 
ters are  substantially  made  out  by  the  evidence,  they  constitute  a 
complete  defence  against  the  present  suit.^ 


THOMPSON  V.  LACY. 

5  Eng.  Com.  L.  Rep.  285.     1820.^ 

Trover  for  goods.  Plea,  not  guilty.  At  the  trial  before  Abbott, 
C.  J.,  at  the  London  sittings  after  last  Trinity  term,  it  appeared 
the  defendant  kept  a  house  of  public  entertainment,  called  the 
Glole  Tavern  and  Coffee  Home,  in  Fore  Street,  Mooregate,  where 
he  provided  lodging  and  entertainment  for  travellers  and  others. 
No  stage  coaches  or  wagons  stopped  there,  nor  were  there  any 
stables  belonging  to  the  house.  The  plaintiff,  in  December,  1818, 
having  lived  before  that  time  in  furnished  lodgings  in  London, 
went  to  the  defendant's  house  and  engaged  a  bed;  he  continued 
to  reside  there  for  several  months,  and  then  left  the  place.  The 
defendant,  in  his  bill,  charged  for  eighty-three  nights'  lodgings; 
and  claimed  to  detain  the  goods  mentioned  in  the  declaration,  on 
account  of  money  due  to  him  for  lodging  and  entertainment  pro- 
vided for  the  plaintiff.     Upon  these  facts,  the  Lord  Chief  Justice 

2  After  a  lengthy  review  of  the  evidence  the  court  decided  that  the  decree 
of  the  District  Court  in  favor  of  the  Steamboat  Company  ought  to  be  af- 

^™le'Fe?i!le  v.  Babcock  (1878),  16  Hun  (N.  Y.)  313,  where  an  express 
company  was  found  not  to  be  a  common  carrier  of  glass;  Collier  v.  Langan 
T  S  &  M  Co.  (1910),  147  Mo.  App.  700,  where  defendant  was  found  to  be 
a 'common  carrier  of  household  goods  only;  Tunnell  v.  Pettijohn  (l'^"''''  j 
Harr  (Del.)  48,  where  defendant's  profession  as  a  common  carrier  was  held 
not  to  extend  to  objects  too  large  to  be  conveniently  carried  on  his  cart. 

1  Concurring  opinions  of  Abbott,  C.  J.,  and  Best,  J.,  are  omitted. —  Ed. 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  95 

was  of  opinion,  that  the  defendant  had  a  lien  upon  the  goods,  and 
the  plaintiff  was  nonsuited,  with  liberty  to  move  to  enter  a  verdict 
for  nominal  damages,  the  defendant  undertaking,  in  that  case,  to 
re-deliver  the  goods.  A  rule  nisi  having  accordingly  been  obtained 
in  the  last  term  for  that  purpose, 

Marryat  and  E.  Laives  now  showed  cause,  and  referred  to  Park- 
hurst  V.  Foster,  1  Salk.  387. 

Crurneij  and  F.  Pollock,  contra,  in  support  of  the  rule  cited  Calye's 
Case,  8  Coke,  683. 

Baylet,  J.  I  am  of  opinion  that  this  is  substantially  an  inn. 
In  order  to  learn  its  character,  we  must  look  to  the  use  to  which 
it  is  applied,  and  not  merely  to  the  name  by  which  it  is  designated. 
Now  this  house  was  used  for  the  purpose  of  giving  accommoda- 
tion to  travellers,  who,  in  London,  reside  either  in  lodgings  or  in 
inns.  The  defendant  did  not  merely  furnish  tea  and  coffee  as 
the  keeper  of  a  coffee-house  does,  nor  a  table  as  the  keeper  of  a 
tavern  does ;  but  he  provided  lodgings,  and  that  in  the  way  they  are 
provided  at  inns;  for  the  charge  was  at  so  much  per  night.  In 
the  Six  Carpenter's  case,  8  Coke,  290,  a  tavern  is  so  far  considered 
as  an  inn,  that  all  persons  are  said  to  have  a  right  to  enter  it.  And 
I  take  the  true  definition  of  an  inn  to  be,  a  house  where  the 
traveller  is  furnished  with  everything  which  he  has  occasion  for 
whilst  on  his  way.  It  has  been  said,  however,  that  in  London  the 
character  of  inn  belongs  only  to  those  houses  of  public  entertain- 
ment frequented  by  wagons  and  stage  coaches.  Now  if  the  lia- 
bility of  a  party  as  innkeeper  depended  on  such  a  circumstance,  it 
would  follow  that  a  person  coming  to  such  a  house  as  this  from 
the  country  in  his  own  private  carriage,  or  in  a  post-chaise, 
could  not  be  entitled  to  consider  the  owner  as  responsible  for  the 
safety  of  his  goods.  It  has  also  been  urged,  that  to  constitute  an 
inn  there  should  be  stables  annexed  to  it:  if  that  were  so,  many 
inferior  houses  of  entertainment  in  the  country,  frequented  by  foot 
travellers,  would  not  come  within  the  description;  and  the  poorer 
travellers  would  not  have  the  protection  which  the  law  gives  to  a 
guest  against  an  innkeeper.  I  think,  therefore,  that  in  point  of 
law  this  is  an  inn,  fed  that  the  defendant  is  under  the  obligations 
to  which  innkeepers  are  liable,  viz.,  that  he  is  bound  to  receive 
all  persons  who  are  capable  of  paying  a  reasonable  compensation 
for  the  acconimodation  provided,  and  that  he  is  liable  for  their 
goods,  if  lost  or  stolen;  and,  on  the  other  hand,  that  he  has  a  lien 
on  the  goods  of  his  guests  for  the  payment  of  his  bill.  This  rule 
must,  therefore,  be  discharged.  Eule  discharged.^ 

2  "  But  it  has  been  decided  that  a  man  may  be  an  innkeeper,  and  liable 
as   such,   though   he   has   no   provision   for   horses."     Kisten   v.    Hildebrand 


96  THE    SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

KANSAS  PACIFIC  RY.  CO.  v.  NICHOLS,  KENNEDY  &  CO. 

9  Kan.  235.     1872.^ 

Valentine,  J.  The  main  question  in  this  case  is  whether  the 
railway  company,  when  it  took  the  cattle  of  the  plaintiffs  below  for 
the  purpose  of  transporting  them  over  its  road,  assumed  the  respon- 
sibilities of  a  common  carrier  or  not.  We  thirik  it  did.  This  ques- 
tion has  already  been  decided  in  this  court  in  the  case  of  the  Kansas 
Pac.  Ky.  Co.  v.  Reynolds,  8  Kan.  623.  In  the  case  of  Kimball  v. 
Rutland  &  B.  R.  Co.  36  Vt.  247,  254,  et  seq.,  the  court  decided  that 
"  a  railway  company  that  transport  cattle  and  live-stock  for  hire, 
for  such  persons  as  choose  to  employ  them,  thereby  assume  and 
take  upon  themselves  the  relation  of  common  carriers,  and,  with 
the  relation,  the  duties  and  obligations  which  grow  out  of  it;  and 
they  are  none  the  less  common  carriers  from  the  fact  that  the  trans- 
portation of  cattle  is  not  their  principal  business  or  employment." 
See,  also  Welsh  v.  Pittsburg,  Ft.  W.  &  C.  R.  Co.  10  Ohio  St.  65. 
In  the  case  of  the  Great  Western  Ry.  Co.  v.  Hawkins,  18  Mich.  427, 
433,  the  supreme  court  of  Michigan  use  the  following  language: 
*'  The  company  in  this  case  must  be  regarded  as  common  carriers, 
and  liable  as  such,  except  so  far  as  that  liability  was  qualified  by 
the  special  contract."  The  special  contract  just  mentioned  was  a 
contract  to  transport  nineteen  horses  from  Paris,  Canada,  to  De- 
troit, Michigan,  and  there  is  nothing  in  the  contract  or  in  the 
report  of  the  case  that  tends  to  show  that  the  company  held  them- 
selves out  as  common  carriers  of  live  stock,  or  that  they  anywhere 
agreed  or  admitted  that  they  were  such  carriers,  and  they  carried 
these  horses  under  a  special  contract.  See,  also,  the  authorities 
cited  in  the  brief  of  defendants  in  error,  and  2  Redf.  Rys.  (4th 
Ed.)  144,  note  2,  and  cases  there  cited;  Wilson  v.  Hamilton, 
4  Ohio  St.  738;  Sager  v.  Portsmouth  R.  Co.  31  Me.  228;  Clarke 
V.  Rochester  &  S.  R.  Co.  14  N.  Y.  570 ;  North  Mo.  R.  Co.  v.  Akers, 
4  Kan.  453;  Keeney  v.  Grand  Trunk  Ry.  Co.,  59  Barb.  104;  Welsh 
V.  Pittsburg,  Ft.  W.  &  C.  R.  Co.  10  Ohio  St.  65.     It  is  claimed 

(1848),  9  B.  Mon.  (Ky.)  72,  74.  "Edwards  says,  a  hotel  'is  only  an  ele- 
gant kind  of  common  iun.'  (Edwards  on  Bailments,  401.)  The  same  au- 
thor remarks,  in  a  note  at  the  bottom  of  page  402,  '  Every  hotel  is  an  inn, 
but  not  every  iun  is  a  hotel.'  At  common  law,  any  person  may  keep  an 
inn  for  the  public  accommodation,  without  a  license,  as  the  keeping  of  it  is 
not  a  franchise,  but  a  lawful  trade  open  to  every  citizen.  (The  Overseers, 
etc.,  V.  Warner,  3  Hill  R.  150.)  And  I  am  of  the  opinion  any  person  may 
keep  an  inn,  tavern  or  hotel,  in  this  State,  without  having  a  Hcense  to  sell 
strong  or  spiritous  liquors  and  wines  to  be  drank  in  his  house."  People  v. 
Murphy   (1861),  5  Parker's  Crim.  R.    (N.  Y.)    130,  132. 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion  are 
omitted. —  Ed. 


SEC.    I.]  WHAT    SERVICE    MUST    BE   REXDERED.  97 

that  a  different  doctrine  has  recently  been  held  in  Michigan.     Michi- 
gan South.  &  N.  I.  R.  Co.  V.  McDonough,  21  Mich.  165. 

This  is  certainly  true  with  respect  to  the  railroad  then  under 
consideration  by  the  court;  but  whether  it  is  true  with  regard  to 
all  railroads  in  the  state  of  Michigan  is  not  so  certain.  See  pages 
189,  198,  and  199  of  the  opinion,  and  the  comments  of  the  court 
on  the  provisions  of  the  charter  of  the  Michigan  Southern  Railroad 
Company,  and  the  act  consolidating  it  with  the  Northern  Indiana 
Railroad  Company.  But  if  this  decision  does  not  apply  to  all  the 
railroads  of  Michigan  as  well  as  to  the  Michigan  Southern  &  North- 
ern Indiana  Railroad  Company,  under  its  peculiar  charter,  does  it  in 
any  manner  indicate  what  the  law  is  in  Kansas  ?  We  think  not,  or 
but  very  little  at  most.  In  Michigan,  since  April,  1870,  railroads 
have  not  been  public  purposes,  or  public  uses,  in  the  sense  that  they 
are  such  in  the  other  states  of  the  Union.  In  that  state  they  are 
purely  and  strictly  private  purposes  or  uses.  People  v.  Salem,  20 
Mich.  452,  475,  480,  485.  The  supreme  court  of  that  state  say 
that  "  they  (railroad  companies)  are  public  agents  in  the  same 
sense  that  the  proprietors  of  many  other  kinds  of  private  business 
are,  and  not  in  any  other  or  different  sense."  "  Our  policy  in  that 
respect,"  say  the  court,  "  has  changed ;  railroads  are  no  longer  public 
works,  but  are  private  property."  Railroads  are  private,  according 
to  that  decision,  in  the  same  sense  that  the  different  kinds  of 
business  of  hackmen,  draymen,  proprietors  of  stage-coaches,  mer- 
chants, newspaper  proprietors,  physicians,  manufacturers,  mechan- 
ics, hotel-keepers,  millers,  etc.,  are  private.  Railroads  in  Michigan 
seem  from  that  decision  to  be  such  private  corporations  as  are 
described  in  the  case  of  Leavenworth  Co.  v.  Miller  7  Kan.  *524, 
*535.  If  they  are  such  private  corporations  as  there  described,  of 
course  they  have  a  right  to  be  common  carriers  of  just  such  property 
as  they  choose,  no  more  and  no  less.  This  is  not  so  in  Kansas. 
The  railroads  of  Kansas  are  organized  upon  a  different  basis.  In 
Kansas  they  are  endowed  with  a  kind  of  quasi  public  as  well  as 
private  character.  In  Kansas  they  are  so  far  public  that  the  Sov- 
ereign power  of  eminent  domain  may  be  exercised  for  their  benefit, 
and  they  are  so  far  public,  that  other  public  aid  may  be  extended 
to  them.  It  is  believed  that  no  railroad  has  yet  been  built  in 
Kansas  that  has  not  been  aided  both  by  the  exercise  of  the  power 
of  eminent  domain,  and  by  other  public  aid,  such  as  lands  and 
county  or  municipal  bonds.  Railroads  are  public  purposes  in  no 
sense  except  in  the  sense  of  being  common  carriers  of  freight  and 
passengers.  It  is  true  that  there  are  incidental  public  benefits 
arising  from  the  creation  and  operation  of  railroads,  such  as 
the  increase  in  the  value  of  property  along  their  routes,  the  increase 


98  THE    SERVICE    TO    BE   RENDERED.  [CHAP.    II. 

of  the  public  revenues,  etc.,  but  these  are  only  incidental  benefits, 
and  are  not  at  all  what  make  railroads  public  purposes.  And  this 
public  character  of  railroads  is  stamped  upon  them  by  the  sovereign 
power  where  it  authorizes  their  coming  into  existence;  for  other- 
wise they  could  receive  no  public  aid  until  the  roads  should  be 
constructed  and  in  operation,  and  until  the  roads  should  become 
public  purposes  by  virtue  of  becoming  common  carriers  of  freight 
or  passengers.  And  if  they  were  created  absolutely  private  corpora- 
tions they  could  become  common  carriers  only  by  holding  themselves 
out  as  such,  and  by  actually  carrying  freight  or  passengers. 

We  suppose  it  will  not  be  contended  that  any  kind  of  public  aid 
could  be  extended  to  a  purely  private  corporation.  If  a  railroad 
company  is  created  as  a  private  carrier,  and  not  as  a  public  or  com- 
mon carrier,  we  suppose  that  no  one  will  contend  that  the  sovereign 
power  of  eminent  domain  could  be  exercised  for  its  benefit  in  its 
construction,  or  that  any  public  aid  of  any  kind  whatever  could  be 
extended  to  it.  That  railroads  are  created  common  carriers  of  some 
kind,  we  believe  is  the  universal  doctrine  of  all  the  courts.  The 
main  question  is  always  whether  they  are  common  carriers  of  the 
particular  thing  then  under  consideration.  The  question  in  this 
case  is  whether  they  are  common  carriers  of  cattle.  So  far  as 
our  statutes  are  concerned  no  distinction  is  made  between  the  carry- 
ing of  cattle  and  that  of  any  other  kind  of  property.  Under  out 
sti\tutes  a  railroad  may  as  well  be  a  common  carrier  of  cattle  as  of 
goods,  wares,  and  merchandise,  or  of  any  other  kind  of  property. 
Now,  as  no  distinction  has  been  made  by  statute  between  the  carry- 
ing of  the  different  kinds  of  property,  we  would  infer  that  railroads 
were  created  for  the  purpose  of  being  common  carriers  of  all  kinds 
of  property  which  the  wants  or  need  of  the  public  require  to  be 
carried,  and  which  can  be  carried  by  railroads ;  and  particularly  we 
would  infer  that  railroads  were  created  for  the  purpose  of  being 
common  carriers  of  cattle.  As  Kansas,  and  all  the  surrounding 
states  and  territories,  with  their  boundless  prairies  and  nutritious 
grasses,  are  destined  to  be  great  stock-growing  countries,  it  can 
scarcely  be  supposed  that  the  legislature  in  providing  common 
carriers  for  the  property  of  the  public  should  have  omitted  to  provide 
for  one  of  the  most  important  kinds  of  property,  a  vast  source  of 
unbounded  wealth.  We  have  no  navigable  streams  within  the  boun- 
daries of  Kansas  upon  which  to  transport  cattle,  and  hence  they 
must  be  transported  by  railroad,  if  transported  by  any  means  except 
by  driving  them  on  foot. 

It  is  claimed,  however,  that  "  the  transportation  of  cattle  and  live- 
stock by  common  carriers  hy  land  was  unknown  to  the  common 
law."     Suppose  it  was ;  Avhat  does  that  prove  ?     The  transportation 


SEC.    I.]  WHAT   SEEVICE    MUST   BE   RENDEKED.  99 

of  thousands  of  other  kinds  of  property,  either  by  land  or  water, 
was  unknown  to  the  common  law,  and  yet  such  kinds  of  property 
are  now  carried  by  common  carriers  and  by  railroads  every  day. 
We  get  our  common  law  from  England.  It  was  brought  over  by 
our  ancestors  at  the  earliest  settlement  of  this  country.  It  dates 
back  to  the  fourth  year  of  the  reign  of  James  I.,  or  1607,  when  the 
first  English  settlement  was  founded  in  this  country  at  Jamestown, 
Virginia.  The  body  of  the  laws  of  England  as  they  then  existed 
now  constitute  our  common  law.  It  is  so  fixed  by  statute  in  this 
state  (Comp.  Laws,  678;  Gen.  St.  1137,  §  3),  and  is  generally  so 
fixed  by  statute  or  by  judicial  decisions  in  the  other  states.  The 
reason  why  cattle  and  live-stock  were  not  transported  hy  land  by 
common  carriers,  at  common  law,  was  because  no  common  carrier 
at  the  time  our  common  law  was  formed  had  any  convenient  means 
for  such  transportation. 

Among  the  other  kinds  of  property  not  transported  by  common 
carriers,  either  by  land  or  water,  at  the  time  our  common  law  was 
formed  are  the  following:  reapers,  mowers,  wheat-drills,  corn- 
planters,  cultivators,  threshing-machines,  corn-shellers,  gypsum, 
guano,  Indian  corn,  potatoes,  tobacco,  stoves,  steam-engines,  sew- 
ing-machines, washing-machines,  pianos,  reed  organs,  fire  and  bur- 
glar proof  safes,  etc. ;  and  yet  no  one  would  now  contend  that  rail- 
roads are  not  common  carriers  of  these  kinds  of  articles.  At  com- 
mon law  the  character  of  the  carrier  was  never  determined  by  the 
kind  of  property  that  he  carried.  He  might  have  been  a  private 
or  special  carrier  of  goods,  wares,  and  merchandise,  or  of  any  other 
kind  of  property,  or  he  might  have  been  a  public  or  common  carrier 
of  cattle,  live-stock,  or  any  other  kind  of  property,  just  as  he  chose. 
All  personal  property  was  subject  to  be  carried  by  a  common  carrier, 
and  no  personal  property  was  exempt.  Whether  a  person  was  a 
common  carrier  depended  wholly  upon  whether  he  held  himself  out 
to  the  world  as  such,  and  not  upon  the  kind  of  property  that  he 
carried.  A  common  carrier  was  such  as  undertook,  "  generally,  and 
not  as  a  casual  occupation,  and  for  all  people  indifferently,  to  con- 
vey goods  and  deliver  them  at  a  place  appointed,  for  hire,  as  a 
business,  and  with  or  without  a  special  agreement  as  a  price."  2 
Kent,  Comm.  598.  And  he  could  hold  himself  out  as  a  common 
carrier  by  engaging  in  the  business  generally,  or  by  announcing  or 
proclaiming  it  to  the  world  by  the  issuing  of  cards,  circulars,  ad- 
vertisements, etc.,  or  by  any  other  means  that  would  let  the  public 
know  that  he  intended  to  be  a  common  or  general  carrier  for  the 
public.  Eailroads  hold  themselves  out  as  common  carriers  by  an 
act  irrevocable  on  their  part  in  their  very  creation  and  organization. 
The  very  nature  of  their  business  is  such  that  by  engaging  in  it. 


100  THE    SERVICE   TO   BE   RENDERED.  [CHAP.    IT. 

or  offering  to  engage  in  it,  they  hold  themselves  out  as  common  car- 
riers. 

But  let  us  return  to  the  point  more  especially  under  consideration. 
At  common  law  no  person  was  a  common  carrier  of  any  article 
■u^iless  he  chose  to  be,  and  unless  he  held  himself  out  as  such ;  and 
he  was  a  common  carrier  of  just  such  articles  as  he  chose  to  be,  and 
no  others.  If  he  held  himself  out  as  a  common  carrier  of  silks  and 
laces,  the  common  law  would  not  compel  him  to  be  a  common 
carrier  of  agricultural  implements,  such  as  plows,  harrows,  etc. 
If  he  held  himself  out  as  a  common  carrier  of  confectionery  and 
spices,  the  common  law  would  not  compel  him  to  be  a  common 
carrier  of  bacon,  lard,  and  molasses.  Tunnell  v.  Pettijohn,  2  Harr. 
(Del.)  48.  And  it  seems  to  us  clear,  beyond  all  doubt,  that  if  any 
person  had,  in  England,  prior  to  the  year  1607,  held  himself  out  as 
a  common  carrier  of  cattle  and  live-stock  by  land,  the  common  law 
would  have  made  him  such.  If  so,  where  is  the  valid  distinction 
that  is  attempted  to  be  made  between  the  carrying  of  live-stock 
and  the  carrying  of  any  other  kind  of  personal  property?  The 
common  law  never  declared  that  certain  kinds  of  property  only 
could  be  carried  by  common  carriers,  but  it  permitted  all  kinds  of 
personal  property  to  be  so  carried.  At  common  law  any  person 
could  be  a  common  carrier  of  all  kinds,  or  any  kind,  and  of  just 
such  kinds,  of  personal  property  as  he  chose;  no  more,  nor  less. 
Of  course,  it  is  well  known  that  at  the  time  when  our  common  law 
had  its  origin,  that  is,  prior  to  the  year  1607,  railroads  had 
no  existence.  But  when  they  came  into  existence  it  must  be  ad- 
mitted that  they  would  be  governed  by  the  same  rules  so  far  as 
applicable  which  govern  other  carriers  of  property.  Therefore  it 
must  be  admitted  that  railroads  might  be  created  for  the  purpose 
of  carrying  one  kind  of  property  only,  or  for  carrying  many  kinds, 
or  for  carrying  all  kinds  of  property  which  can  be  carried  by  rail- 
roads, including  cattle,  live-stock,  etc.  In  this  state  it  must  be 
presumed  that  they  were  created  for  the  purpose  of  carrying  all 
kinds  of  personal  property.  It  can  hardly  be  supposed  that  they 
were  created  simply  for  the  purpose  of  being  carriers  of  such 
articles  only  as  were  carried  by  common  carriers  under  the  common 
law  prior  to  the  year  1607;  for,  if  such  were  the  case,  they  would 
be  carriers  of  but  very  few  of  the  innumerable  articles  that  are  now 
actually  carried  by  railroad  companies.  And  it  can  hardly  be  sup- 
posed that  they  were  created  for  the  mere  purpose  of  taking  the 
place  of  pack-horses,  or  clumsy  wagons,  often  drawn  by  oxen, 
or  such  other  primitive  means  of  carriage  and  transportation  as 
were  used  in  England  prior  to  that  year.  Eailroads  are  undoubtedly 
created  for  the  purpose  of  carrying  all  kinds  of  property  which 


SEC.    I.]  WHAT   SERVICE    MUST   BE   KENDEKED.  101 

the  common  law  would  have  permitted  to  be  carried  by  common 
carriers  in  any  mode,  either  by  land  or  water,  which,  probably, 
includes  all  kinds  of  personal  property.  Our  decision,  then,  upon 
this  question  is  that  whenever  a  railroad  company  receive  cattle  or 
live-stock  to  be  transported  over  their  road  from  one  place  to 
another,  such  company  assume  all  the  responsibilities  of  a  common 
carrier,  except  so  far  as  such  responsibilities  may  be  modified  by 
special  contract.- 

2  A  railroad  company  is  bound  to  receive  and  carry  cattle,  unless  it  has 
a  reasonable  excuse  for  its  refusal.  Chicago  &  A.  R.  R.  Co.  v.  Ericksoii 
(1870)  91  111.  613.  A  railroad  carrying  livestock  is  liable  as  a  common 
carrier.  Maynard  v.  Syr.  B.  &  N.  Y.  R.  Co.  (1878),  71  N.  Y.  180;  Evans 
V.  Fitchburg  K.  Co.  (1872),  111  Mass.  142.  A  railroad  is  not  a  common 
carrier  of  cattle  transported  unless  it  is  proved  to  have  assumed  all  ot  the 
liabilities  of  a  common  carrier.  Lake  Shore  &  M.  S.  R.  R.  Co.  v.  Perkins 
(187"^)  "^5  Mich.  329.  A  railroad  may  refuse  to  become  a  common  carrier 
of  dogs'.     Honevman  v.  Oregon  &  C.  R.  R.  Co.   (1886),  13  Oreg.  352. 

"  We  might  further  add  that  in  these  days  there  would  be  little  reason 
for  holding  that  a  railway  common  carrier  should  be  required  to  accept 
monev  to  be  shipped  as  freight,  because  there  is  operated  in  connection  with 
almost  every  such  carrier  in  the  country  express  companies  who  make  a 
snecialtv  of  carrying  money  and  other  valuable  and  small  packages.  Chesa- 
peake &  O.  Ry.  Co.  V.  Hall  (1910),  136  Ky.  379,  389.  And  see,  Kuter  v. 
Michigan  C.  R.  R.  Co.   (1853),  Fed.  Cas.  No.  7955. 

As  to  goods  improperly  packed,  or  of  dangerous  character,  as  nitro- 
glycerine, dynamite,  gunpowder,  aqua  fortis,  oil  of  vitriol,  matches,  etc., 
fee  California  Powdei-  Works  v.  Atl.  &  Rac.  R.  R.  Co.  (1896)  113  Calif. 
329.     See  also  Sutcliffe  v.  Gr.  W.  Ry.   [1910],  1  K.  B.  4(8,  494 

"  A  common  carrier  may,  under  certain  conditions,  hold  itself  out  to  the 
public  as  being  a  common  carrier  of  certain  articles  of  freight,  and  if  it 
was  only  engaged  in  the  carriage  of  specific  articles,  it  would  not  be  under 
any  obligation  to  carry  any  other  things."  Dictum  in  Crescent  Coal  Co.  v. 
L.  &  N.  R.  R.  Co.   (1911).  143  Ky.  73.  79.  .       ,  ,     . ,       .u 

"  The  proposed  road,  when  completed,  is  to  be  used  solely  tor  the  pur- 
pose of  transferring,  in  railroad  cars,  freight  between  the  different  depots, 
warehouses,  elevators,  manufactories,  etc..  that  are  or  may  be  on  its  line, 
or  may  be  reached  by  its  lateral  tracks,'  and  the  point  is  made  that  a  com- 
pany whose  line  of  road  is  limited  to  a  single  street,  and  whose  proposed 
business  is  so  circumscribed,  does  not  come  within  the  purview  of  the  act 
authorizing  the  incorporation  of  railway  companies  by  general  law.  The 
argument  is,  that  the  legislature,  in  providing  a  general  law  on  the  subject, 
must  have  intended  to  include  only  such  companies  as  would  perform  the 
usual  functions  of  common  carriers,  and  as  the  company  in  question  does 
not  propose  to  receive  shipments  of  freight  generally,  or  carry  passengers 
at  all.  it  is  contended  the  appellee  is  not.  within  the  meaning  of  the  act, 
a  railway  company,  and  hence  its  supposed  organization  was  unauthorized, 
and  all  acts  done  under  it  are  illegal  and  void.  The  proposed  business  of 
this  company  is  clearly  such  as  is  usually,  if  not  uniformly,  done  by  railway 
companies,  and  we  are  aware  of  no  rule  of  law  requiring  a  railway  track 
to  be  of  any  particular  length,  or  that  it  should  extend  beyond  the  limits 
of  a  particular  town  or  city,  though  most  railroads  certainly  do. 

"  Nor  do  we  see  anything  in  the  objection  that  the  business  of  the  com- 
pany is  to  be  limited  to  the  carrying  of  freight  offered  in  cars  only.  Every 
common  carrier  has  the  right  to  determine  what  particular  line  of  business 
he  will  follow.  If  he  elects  to  carry  freight  only,  he  will  be  under  no  obli- 
gations to  carry  passengers,  and  rice  iicrsa.  So  if  he  holds  himself  out  as  a 
carrier  of  a  particular  kind  of  freight,  or  of  freight  generally,  prepared  for 
carriage  in  a  particular  way,  he  will  only  be  bound  to  carry  to  the  extent 
and  in  the  manner  proposed.  lie  will  nevertheless  be  a  common  carrier. 
Wiggins  Ferry  Co.  v.  E.  St.  L.  Ry.  Co.  (1883),  107  111.  450,  457. 


102  THE    SERVICE    TO    BE   RENDERED.  [CHAP.    II. 


CLEVELAND,  CINCINNATI,  CHICAGO  &  ST.  LOUIS 
EAILWAY  CO.  V.  HENEY. 

170   Ind.  94.     1908.^ 

Hadley,  J.  So  far  as  expression  has  been  given,  there  is  unani- 
mity among  the  courts  of  this  country  that  a  railroad  corporation, 
as  a  common  carrier,  is  under  no  legal  duty  to  haul  show  cars,  that  is, 
cars  owned  and  fitted  up  by  showmen  and  used  exclusively  by  them 
to  house  and  transport  their  employees  and  show  property  as  a  com- 
plete outfit  from  place  to  place  over  railroads.  Coup  v.  Wabash, 
etc.,  E.  Co.,  56  Mich.  Ill,  33  N.  W.  315,  56  Am.  Eep.  374;  Chi- 
cago, etc.,  E.  Co.  V.  Wallace,  66  Fed.  508,  14  C.  C.  A.  357,  30 
L.  E.  A.  161 ;  Eobertson  v.  Old  Colony  E.  E.  Co.,  156  Mass.  535,  31 
N.  E.  650,  33  Am.  St.  Eep.  483;  Wilson  v.  Atlantic,  etc,  E.  Co. 
(  C.  C.  1904)  139  Fed.  774,  affirmed  133  Fed.  1033,  66  C.  C.  A. 
486;  Hutchinson  on  Carriers  (3d  Ed.)  §  88,  p.  84;  Moore  on  Car- 
riers, §  38.  The  rule  rests  upon  the  principle  that  such  loaded 
cars  or  vehicles  are  not  such  goods  as  railroads  hold  themselves 
out  to  carry,  and  in  respect  to  which  they  assume  a  public  duty 
to  serve  all  alike  who  apply  for  carriage,  and  such  cars  being  a 
class  of  property  they  do  not  profess  to  carry,  and  the  drawing  of 
which  is  inconsistent  with  their  business,  they  are  therefore  ex- 
empt from  all  public  duty  to  haul  them.  1  Hutchinson  on  Carriers 
(3d  Ed.)  §  47,  and  authorities  collated;  Moore  on  Carriers,  §  1. 
A  common  carrier  may,  however,  become  a  private  carrier,  and  by 
special  agreement  undertake  for  hire  to  carry  that  which  he  is 
under  no  obligation  to  carry.  Louisville,  etc.,  Co.  v.  Keefer  (1896) 
146  Ind.  31,  36,  44  N.  E.  796,  38  L.  E.  A.  93,  58  Am.  St.  Eep. 
348,  and  cases  cited;  Pittsburgh,  etc.,  Co.  v.  Mahoney  (1897) 
148  Ind.  196,  300,  46  N.  E.  917,  47  N.  E.  464,  40  L.  E.  A.  101, 
63  Am.  St.  Eep.  503,  and  cases  cited;  Hutchinson  on  Carriers  (3d 
Ed.)  §  44.  In  the  latter  section  the  author  states:  "A  common 
carrier  may  undoubtedly  become  a  private  carrier,  or  bailee  for 
hire,  when  as  a  matter  of  accommodation  or  special  engagement  he 
undertakes  to  carry  something  which  it  is  not  his  business  to  carry. 
The  relation  in  such  a  case  is  changed  from  that  of  a  common 
carrier  to  that  of  a  private  carrier,  and  where  this  is  the  effect  of  a 
special  arrangement  a  carrier  is  not  liable  as  a  common  carrier  and 
cannot  be  proceeded  against  as  such."  See,  also,  Baltimore,  etc., 
E.  Co.  V.  Voigt,  176  U.  S.  498,  30  Sup.  Ct.  385,  44  L.  Ed.  560.- 

1  Only  an  extract  from  the  opinion  is  here  given. —  Ed. 

2  See  Chicago,  M.  &  St.  P.  Ry.  Co.  v.  Wallace  (1895),  66  Fed.  506,  30 
L.  R.  A.  161,  and  note. 

"Appellee   is   a   common   carrier   for   hire,   and   as   such   is   bound,    when 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  103 


AsHURST,  J.,  IN  HYDE  V.  TRENT  AND  MERSEY 
NAVIGATION  CO. 

5  Term  R.  389.     1793.^ 

The  inclination  of  my  opinion  on  the  general  question  is  that 
a  carrier  is  bound  to  deliver  tl^goods  to  the  person  to  whom  they 
are  directed.  A  contrary  decision  would  be  higliTy  inconvenient, 
and  wbuldT^pen  a  door  to  fraud ;  for  if  the  liability  of  the  carrier 
were  to  cease  when  he  had  brought  the  goods  to  any  inn  where 
he  might  choose  to  put  up  his  coach,  and  a  parcel  containing  plate 
or  jewels,  brought  by  him,  were  lost  before  it  was  delivered  to  the 
owner,  the  latter  would  only  have  a  remedy  against  a  common 
porter.  It  has  been  said,  however,  that  it  is  the  practice  of  many 
persons  to  send  to  the  inn  for  their  goods;  but  that  does  not 
prove  that  the  carrier  is  not  bound  to  deliver  them,  if  they  do  not 
send.  If  the  owner  choose  to  send  for  his  goods,  that  merely 
discharges  the  carrier  from  his  liability  in  that  case;  it  only  dis- 
penses with  the  general  obligation  thrown  by  the  law  upon  the  car- 
rier :  but  it  does  not  apply  to  other  cases  where  that  obligation  is 
not  dispensed  with.  But  on  this  question  I  do  not  mean  to  give  any 
decided  opinion.^ 

requested,  to  receive  for  transportation  over  its  lines  cars  of  other  common 
carriers,  and  as  to  such  cars  it  holds  the  same  relation  as  to  ordinary- 
freight  received  by  it  for  transportation,  and  is  held  to  the  same  measure 
and  character  of  liability  to  the  owners  of  the  cars,  as  would  attach  with 
respect  to  any  other  property  received  by  it  for  carriage.  (Peoria  &  P.  U. 
Ry.  Co.  V.  Chicago  R.  I.  &  P.  Ry.  Co.,  109  111.  135 ;  East  St.  Louis  C.  Ry. 
Go.  V.  Wabash  St.  L.  &  P.  Ry.  Co,  123  id.  594;  Peoria  &  P.  U.  Ry.  Co.  v. 
U.  S.  R.  S.  Co.,  130  id.  (H3 ;  Schumacher  v.  Chicago  &  N.  W.  Ry.  Co.,  207 
id.  199.)"  Pittsburgh  C.  C.  &  St.  L.  Ry.  Co.  v.  City  of  Chicago  (1909), 
242  111.  178,  188.  Accord:  Chicago,  B.  &  Q.  R.  R.  Co.  v.  Curtis  (1897), 
51  Neb.  412,  453;  Mackin  v.  Boston  &  A.  R.  Co.  (1883),  135  Mass.  201: 
Hudson  V.  Ry.  Co.  v.  Boston  &  M.  R.  R.  (1905),  lOG  App.  Div.  (N.  Y.)  375 
(statutory)  ;  Baldwin  v.  Chicago  R.  I.  &  P.  Ry.  Co.  (1879),  50  la.  680 
(statutory)  ;  Thomas  v.  Missouri  P.  R.  Co.  (1892),  18  S.  W.  (Mo.) 
980  (statutory)  ;  Michigan  C.  R.  Co.  v.  Smithson  (1881),  45  Mich.  212 
(statutory)  ;  Louisville  &  N.  R.  Co.  v.  Boland  (1892),  11  So.  (Ala.) 
667  (statutory).  Contra:  Oregon  S.  L.  &  V.  N.  Ry.  Co.  v.  Northern  P.  R. 
Co.  (1892),  51  Fed.  465.  474;  Little  Rock  &  M.  R.  Co.  v.  St.  Louis  S.  W. 
R.  Co.  ( 1894) ,  63  Fed.  775  ;  and  see  Atchison  T.  &  S.  F.  R.  Co.  v.  Denver 
&  N.  O.  R.  Co.,  infra,  p.  107. 

1  Only  an  extract  from  the  opinion  of  Ashhurst,  J.,  is  reprinted. —  Ed.  _ 

2  "  The  offer  of  the  defendant  presupposes,  what  is  now  conceded,  and  is 
indeed  extremely  well  settled,  that  prima  facie  the  carrier  is  under  an  obli- 
gation to  deliver  the  goods,  to  the  consignee  personally."  Gibson  v.  Culver 
(1837),  17  Wend.  305,  306.  And  see  Starr  v.  Crowley  (1825),  1  McClel.  & 
Young,  129;  Fish  v.  Newton   (1845),  1  Denio.  45. 

"  Common  carriers  are  ordinarily  bound  to  carry  goods  entrusted  to  their 
conveyance  to  the  residence  or  place  of  business  of  the  consignee ;  but 
whether  this  rule  can  be  conveniently  applied  to  the  business  usually  trans- 
acted by  canal  and  railroad  may  admit  of  doubt."  Eagle  v.  White  (1841), 
6  Whart.    (Pa.)    505.  517. 

"  Prima  facie,  there  must  be  actual  delivery,  or  in  the  case  of  a  carrier 


101  THE   SERVICE   TO    BE   KEXDEKED.  [CHAP.    II. 


BULLAED  v.  AMEEICAX  EXPRESS  CO. 

107  Mich.  695.     1895.^ 

MoxTGOMERT,  J.  This  is  an  action  in  case,  commenced  in 
justice  court.  The  declaration,  in  substance,  alleges  that  plaintiff 
is  a  large  shipper  of  celery  by  express  from  Kalamazoo  to  places 
throughout  the  United  States,  upon  lines  of  the  defendant,  a  com- 
mon carrier ;  that  the  defendant,  to  collect  celery  and  other  articles 
for  shipment  in  the  city  of  Kalamazoo,  and  to  deliver  packages  re- 
ceived by  it,  maintains  and  employs  a  large  number  of  men,  horses, 
and  wagons;  that  since  December  1,  1893,  plaintiff's  place  of  busi- 
ness has  been  at  Xo.  506  Douglas  avenue,  in  said  city;  that  during 
the  celery  season  plaintiff  makes  large  daily  shipments  over  de- 
fendant's lines,  and  has  consigned  to  him  packages  of  money  in 
payment  of  celery  shipped  C.  0.  D.,  and  other  articles,  of  all  of 
which  defendant'  had  notice ;  that  plaintiff  repeatedly  requested 
defendant  to  call  at  his  place  of  business  for  his  sliipments,  and  to 
deliver  packages  to  him,  which  defendant  refused  to  do;  that  de- 
fendant collects  for  shipment  from  and  delivers  to  a  large  number 
of  shippers  of  celery  and  other  articles,  under  substantially  the  same 
circumstances,  conditions,  and  situation  as  the  plaintiff',  and  for 
shippers  at  a  greater  distance  from  its  place  of  business  than 
plaintiff's  place,  and  for  shippers  in  the  same  locality  as  the  plain- 
tiff, and  has  unlawfully  discriminated  against  the  plaintiff  by  such 
refusal;  that  plaintiff  has  been  damaged  by  being  compelled  to 
convey  his  celery  to  defendant's  office  for  shipment,  and  procure 
Ms  packages  from  its  office.  The  plaintiff  had  judgment  in  the 
justice  court.  In  the  circuit  court  the  court  directed  a  verdict 
for  the  defendant. 

The  evidence  on  the  trial  showed  that  the  defendant's  agents, 
acting  in  unison  with  the  agents  of  other  express  companies,  had 
established  limits  in  the  city,  beyond  which  they  did  not  go  to 
receive  goods  for  shipment  or  to  deliver  packages.  In  some  in- 
stances these  limits  extended  a  greater  distance  from  the  de- 
fendant's office  than  plaintiff's  place  of  business.     It  was  also  in 

by  water,  a  landing  at  the  wharf,  or  usual  landing  place,  with  due  and 
reasonable  notice  to  the  consignee  of  the  arrival  of  the  goods.  But  this 
rule  may  be  Tarie<l  by  contract,  or  affected  by  a  well-established,  reason- 
able and'  generally  known  custom  and  usage."  Huston  r.  Peters,  Hardin  & 
Co.    { 18.58 1,  1  Mete.    (Ky. »   .5-58,  .562. 

*'  It  is  not  the  customary  duty  of  a  railroad  company  to  tender  the  goods 
to  the  consignee,  but  the  goods  are  kept  at  the  depot  or  warehouse  until 
the  consignee  calls  for  them."  Jarrett  i-.  Great  N.  Ry.  Co.  (189St.  74  Minn. 
477,  480. 

1  The  statement  of  facts  and  arguments  of  counsel  are  omitted. —  Ed. 


SEC.   I.]  WHAT   SEETICE   MUST  BE  EEXDEEED.  105 

evidence  that  the  plaintiff  knew  of  these  limits  before  moving  into 
his  present  place  of  business,  and  before  transacting  the  business 
with  defendant  in  which  the  inconvenience  arose  which,  it  is  alleged, 
circumstances,  conditions,  and  situation  as  the  plaintiff,  and  for 
caused  damage  to  plaintiff. 

At  the  common  law,  a  carrier  of  goods  was  not  boimd  to  accept 
deliver}'  at  any  place  other  than  his  place  of  business,  or  the 
line  of  travel,  in  the  absence  of  the  custom  of  receiving  goods 
at  other  places.  Hutch,  Carr.  §§  82,  87;  Blanchard  v.  Isaacs, 
3  Barb,  388,  But  it  is  insisted  that  the  defendant  in  this  case, 
having  practiced  the  custom  of  receiving  goods  for  shipment  at 
other  points  in  the  city  than  its  office,  was  bound  to  furnish 
equal  facilities  to  all  shippers  who  occupy  a  similar  position. 
We  are  not  impressed  with  the  force  of  this  reasoning,  as  ap- 
plied to  the  facts  in  this  ease.  We  are  cited  to  no  case  in 
which  it  has  been  held  that  a  carrier  is  bound  to  go  beyond  its 
line  to  receive  goods,  and,  while  it  would  not  be  competent  for  a 
common  carrier  to  discriminate  against  shippers  vrithin  its  fised 
limits,  it  is  not  perceived  why,  if  the  company  is  entitled  to  limit 
its  receipt  of  goods  to  its  own  office  or  place  of  business,  it  may  not 
enlarge  these  limits  at  its  discretion,  without  being  bound  to  go 
beyond  them. 

The  duty  to  deliver  to  the  consignee  is  somewhat  broader. 
Carriers  on  land,  receiving  packages,  were,  at  the  common 
law,  generally  bound  to  deliver  to  the  consignee,  at  his  resi- 
dence or  place  of  business.  This  rule  has  not  been  applied  to 
carriers  by  water,  or  railroad  companies,  which  must,  of  necessity, 
be  confined  to  a  fixed  route.  It  has  been  said,  however,  that  ex- 
press companies  owe  their  origin  to  this  very  fact,  and  that  the 
nature  of  their  business  is  to  furnish  a  means  of  transportation  and 
delivery  to  the  consignee.  Wood's  Browne,  Carr.  §  230;  Hutch. 
Carr.  379.  The  question  of  how  far  this  duty  may  be  escaped 
by  usage  is  not  well  settled.  It  has  been  held,  however,  that,  when 
the  business  of  an  office  is  so  small  that  the  company  cannot  or  does 
not  keep  a  messenger  to  make  personal  delivery,  it  is  not  unrea- 
sonable to  require  the  consignee  to  call  at  the  office.  Hutch.  Carr. 
§  380,  If  this  may  be  done,  it  would  seem  to  follow  that  the  com- 
pany may,  so  long  as  the  public  have  notice  of  the  custom,  fix: 
limits  beyond  which  its  agents  are  not  required  to  go  for  delivery. 
If  it  cannot  do  this,  it  is  difficult  to  say  where  would  be  the  limit. 
It  is  clear  that  a  reasonable  limit  is  not  in  all  cases  the  city  limit- 
Conditions  are  often  varied.  If  not  the  city  limit,  can  it  be  said 
that  a  certain  number  of  miles  from  the  office,  in  either  direction, 
would  be  a  reasonable  limit  ?     We  think,  where  the  company,  in  ap- 


106  THE    SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

parent  good  faith,  has  assumed  to  fix  limits,  having  regard  to  the 
public  requirements,  that,  with  regard  to  persons  who  have  dealt 
with  them,  having  knowledge  of  this  fact,  they  are  not  bound 
to  deliver  beyond  these  limits.  We  do  not  determine  what  the  right 
of  one  not  having  knowledge  of  these  limits  would  be.  This  is  not 
such  a  case,  but  in  this  case  we  think  the  court  committed  no  error 
in  directing  a  verdict  for  the  defendant.  Judgment  will  be  af- 
firmed. 

McGrath,  C.  J.,  did  not  sit.     Long,  Grant,  and  Hooker,  J.  J., 
concurred. 


Walworth,  C,  in  VAN  SANTVOOED  v.  ST.  JOHN. 

6  Hill,   157.     1843.^ 

The  evidence  shows  that  the  plaintiffs  in  error  were  not  com- 
mon carriers  between  New  York  and  Little  Falls,  but  only  common 
carriers  of  goods  from  New  York  to  Albany;  and  were  mere  for- 
warders of  such  goods  by  the  canal  lines  when  they  were  directed 
to  places  beyond  Albany,  on  the  canal  route.  And  St.  John  & 
Tousey  had  no  more  right  to  expect  that  these  carriers  between 
New  York  and  Albany  would  themselves  carry  the  box  of  clothing 
in  question  to  Little  Falls,  than  they  had  to  suppose  they  would  de- 
liver the  other  box,  forwarded  by  their  towboat  at  the  same  time,  to 
Hubbard  at  Chicago.  As  to  both,  they  must  have  understood  and 
expected  that  the  owners  of  the  tow-boat  line  would  transport  the 
boxes  to  the  place  where  their  business  as  common  carriers  termi- 
nated, and  send  them  on  in  the  usual  way  as  forwarders,  from  that 
place.^ 


PULLMAN  PALACE  CAR  CO.  v.   LAWRENCE. 

74  Miss.  782.     1897. 
Supra,  p.  9. 

1  Only  part  of  Chancellor  Walworth's  opinion  is  reprinted. —  Ed. 

2  "  The  question  whether  a  railroad  company  can  make  a  valid  contract 
for  the  transportation  of  freight  beyond  the  limits  of  its  own  road,  as  their 
limits  are  fixed  by  its  charter,  as  we  understand  the  decision  of  the  Court 
of  Appeals,  in  West  v.  The  Rensselaer  and  Saratoga  K.  R.  Co.  (4  Seldon, 
37), 'must  now  be  regarded  as  finally  settled.  It  is  only  on  the  supposition 
that  such  a  contract  is  valid,  that  the  decision  in  that  case  can  be  explained. 
It  is,  therefore,  needless  to  refer  to  the  recent  decisions  in  England,  or  to 
prior  decisions  in  our  own  courts,  which  countenance,  if  they  do  not  estab- 
lish, the  same  doctrine."  Schroeder  v.  Hudson  River  R.  R.  Co.  (1885), 
5  Duer,  55,  61. 


SEC.    I.]  WHAT   SERVICE    MUST   BE   EENDEEED.  107 


ATCHISON,  TOPEKA  &  SANTA  FE  R.  E.  CO.  v.  DENVER 
&  NEW  ORLEANS  R.  R.  CO. 

110  U.  S.  667.     1884.^ 

It  appeared  that  when  the  Atchison,  Topeka  &  Santa  Fe  Com- 
pany reached  Pueblo  with  its  line  it  had  no  connection  of  its  own 
with  Denver.  The  Denver  &  Rio  Grande  road  was  built  and  run- 
ning between  Denver  and  Pueblo,  but  the  gauge  of  its  truck  was 
different  from  that  of  the  Atchison,  Topeka  &  Santa  Fe.  Other 
companies  occupying  different  routes  had  at  the  time  substantially 
the  control  of  the  transportation  of  passengers  and  freight  between 
the  Missouri  River  and  Denver.  The  Atchison,  Topeka  &  Santa 
Fe  Company,  being  desirous  of  competing  for  this  business,  entered 
into  an  arrangement,  as  early  as  1879,  with  the  Denver  &  Rio 
Grande  Company  for  the  formation  of  a  through  line  of  transporta- 
tion for  that  purpose.  By  this  arrangement  a  third  rail  was  to  be 
put  down  on  the  track  of  the  Denver  &  Rio  Grande  road,  so  as  to  ad- 
mit of  the  passage  of  cars  continuously  over  both  roads,  and  terms 
were  agreed  on  for  doing  the  business  and  for  the  division  of  rates. 

In  1883  the  Denver  &  New  Orleans  Company  completed  its  road 
between  Denver  and  Pueblo,  and  connected  its  track  with  that  of 
the  Atchison,  Topeka  &  Santa  Fe,  in  Pueblo,  twelve  or  fifteen  hun- 
dred feet  easterly  from  the  junction  of  the  Denver  &  Rio  Grande, 
and  about  three-quarters  of  a  mile  from  the  union  depot  at  which 
the  Atchison,  Topeka  &  Santa  Fe  and  the  Denver  &  Rio  Grande 
interchanged  their  business,  and  where  each  stopped  its  trains 
regularly  to  take  on  and  let  off  passengers  and  receive  and  de- 
liver freight.  The  Denver  &  New  Orleans  Company  erected  at  its 
junction  with  the  Atchison,  Topeka  &  Santa  Fe  platforms  and  other 
accommodations  for  the  interchange  of  business,  and  before  this 
suit  was  begun  the  general  superintendent  of  the  Denver  &  New 
Orleans  Company  made  a  request  in  writing  of  the  general  manager 
of  the  Atchison,  Topeka  &  Santa  Fe,  as  follows : 

"  That  through  bills  of  lading  be  given  via  your  line  and  ours, 
and  that  you  allow  all  freight  consigned  via  D.  &  N.  0.  R.  R.  to 
be  delivered  this  company  at  point  of  junction,  and  on  such  terms 
as  exist  between  your  road  and  any  other  line  or  lines;  that  you 
allow  your  cars,  or  cars  of  any  foreign  line,  destined  for  points 
reached  by  the  D.  &  N.  0.  R.  R.,  to  be  delivered  to  this  company 
and  hauled  to  destination  in  same  manner  as  interchanged  with 

1  The  statement  of  facts  is  abridged,  and  parts  of  the  opinion  are  omitted. 
—Ed. 


108  THE    SERVICE   TO   BE   EENDERED.  [CHAP.    II. 

any  other  line.  That  you  allow  tickets  to  be  placed  on  sale  be- 
tween points  on  line  of  D.  &  N.  0.  E.  E.  and  those  on  line  of  A.  T. 
&  S.  F.  E.  E.,  or  reached  by  either  line;  that  a  system  of  through 
checking  of  baggage  be  adopted;  that  a  transfer  of  U.  S.  mail  be 
made  at  point  of  junction.  In  matter  of  settlements  between  the 
two  companies  for  earnings  and  charges  due,  we  will  settle  daily 
on  delivery  of  freight  to  this  line;  for  mileage  due  for  car  service, 
and  for  amounts  due  for  tickets  interchanged,  we  agree  to  settle 
monthly,  or  in  any  other  manner  adopted  by  your  line,  or  as  is  cus- 
tomary between  railroads  in  such  settlements." 

This  request  was  refused,  and  the  Atchison,  Topeka  &  Santa 
Fe  Company  continued  its  through  business  with  the  Denver  &  Eio 
Grande  as  before,  but  declined  to  receive  or  deliver  freight  or  pas- 
sengers at  the  junction  of  the  Denver  &  New  Orleans  road,  or  to 
give  or  take  through  bills  of  lading,  or  to  sell  or  receive  through 
tickets,  or  to  check  baggage  over  that  line.  All  passengers  or 
freight  coming  from  or  destined  for  that  line  were  taken  or  de- 
livered at  the  regular  depot  of  the  Atchison,  Topeka  &  Santa  Fe 
Company  in  Pueblo,  and  the  prices  charged  were  according  to  the 
regular  rates  to  and  from  that  point,  which  were  more  than  the 
Atchison,  Topeka,  &  Santa  Fe  received  on  a  division  of  througli 
rates  to  and  from  Denver  under  its  arrangement  with  the  Denver 
&  Eio  Grande  Company. 

This  bill  in  equity  was  brought  to  compel  the  Atchison,  Topeka  & 
Santa  Fe  Eailroad  Company  to  comply  with  the  terms  of  the  written 
request  served  upon  it. 

Mr.  Chief  Justice  Waite  delivered  the  opinion  of  the  court. 
After  reciting  the  facts  in  the  foregoing  language  he  continued  : 

The  case  has  been  presented  by  counsel  in  two  aspects : 

1.  In  view  of  the  requirements  of  the  Constitution  of  Colo- 
rado alone;  and 

2.  In  view  of  the  constitutional  and  common-law  obligations  of 
railroad  companies  in  Colorado  as  common  carriers. 

We  will  first  consider  the  requirements  of  the  Constitution;  and 
here  it  may  be  premised  that  sec.  G  of  art.  15  imposes  no  greater 
obligation  upon  the  company  than  the  common  law  would  have 
imposed  without  it.  Every  common  carrier  must  carry  for  all  to 
the  extent  of  his  capacity,  without  undue  or  unreasonable  dis- 
crimination either  in  charges  or  facilities.  The  Constitution  has 
taken  from  the  legislature  the  power  of  abolishing  this  rule  as  ap- 
plied to  railroad  companies. 

So  in  sec.  4  there  is  nothing  specially  important  to  the  present 
inquiry  except  the  last  sentence:     "Every  railroad  company  shall 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  109 

have  the  right  with  its  road  to  intersect,  connect  with,  or  cross  any 
other  railroad."  Eailroad  companies  are  created  to  serve  the  public 
as  carriers  for  hire,  and  their  obligations  to  the  public  are  such  as 
the  law  attaches  to  that  service.  The  only  exclusively  constitu- 
tional question  in  the  case  is,  therefore,  whether  the  right  of  one 
railroad  company  to  connect  its  road  with  that  of  another  company, 
which  has  been  made  part  of  the  fundamental  law  of  the  State,  im- 
plies more  than  a  mechanical  union  of  the  tracks  of  the  roads  so 
as  to  admit  of  the  convenient  passage  of  cars  from  one  to  the 
other.  The  claim  on  the  part  of  the  Denver  and  New  Orleans 
Company  is  that  the  right  to  connect  the  roads  includes  the  right 
of  business  intercourse  between  the  two  companies,  such  as  is  cus- 
tomary on  roads  forming  a  continuous  line;  and  that  if  the  com- 
panies fail  or  refuse  to  agree  upon  the  terms  of  their  intercourse 
a  court  of  equity  may,  in  the  absence  of  statutory  regulations,  de- 
termine what  the  terms  shall  be.  Such  appears  to  have  been  the 
opinion  of  the  Circuit  Court,  and  accordingly  in  its  decree  a  com- 
pulsory business  connection  was  established  between  the  two  com- 
panies, and  rules  were  laid  down  for  the  government  of  their  con- 
duct towards  each  other  in  this  new  relation.  In  other  words, 
the  court  has  made  an  arrangement  for  the  business  intercourse  of 
these  companies  such  as,  in  its  opinion,  they  ought  in  law  to  have 
made  for  themselves. 

To  our  minds  it  is  clear  that  the  constitutional  right  in  Colorado 
to  connect  railroad  with  railroad  does  not  itself  imply  the  right 
of  connecting  business  with  business.  The  railroad  companies  are 
not  to  be  connected,  but  their  roads.  A  connection  of  roads  may 
make  a  connection  in  business  convenient  and  desirable,  but  the 
one  does  not  necessarily  carry  with  it  the  other.  The  language  of 
the  Constitution  is  that  railroads  may  "  intersect,  connect  with,  or 
cross  "  each  other.  This  clearly  applies  to  the  road  as  a  physical 
structure,  not  to  the  corporation  or  its  business. 

This  brings  us  to  the  consideration  of  the  second  branch  of  the 
case,  to  wit,  the  relative  rights  of  the  two  companies  at  common 
law  and  under  the  Constitution  as  owners  of  connected  roads,  it 
being  conceded  that  there  are  no  statutory  regulations  applicable  to 
the  subject. 

The  Constitution  expressly  provides : 

1.  That  all  shall  have  equal  rights  in  the  transportation  of  per- 
sons and  property ;  ^ 

2.  That  there  shall  not  be  any  undue  or  unreasonable  discrimina- 
tion in  charges  or  facilities ;  and 

3.  That  preferences  shall  not  be  given  in  furnishing  cars  or 
motive  power. 


110  THE    SERVICE    TO   BE   RENDERED.  [CHAP.    II. 

It  does  not  expressly  provide : 

1.  That  the  trains  of  one  connected  road  shall  stop  for  the  ex- 
change of  business  at  the  junction  with  the  other ;  nor 

2.  That  companies  owning  connected  roads  shall  unite  in  form- 
ing a  through  line  for  continuous  business,  or  haul  each  other's 
cars;  nor 

3.  That  local  rates  on  a  through  line  shall  be  the  same  to  one 
connected  road  not  in  the  line  as  the  through  rates  are  to  another 
which  is;  nor 

4.  That  if  one  company  refuses  to  agree  with  another  owning 
a  connected  road  to  form  a  through  line  or  to  do  a  connecting 
business  a  court  of  chancery  may  order  that  such  a  business  be 
done  and  fix  the  terms. 

The  question,  then,  is  whether  these  rights  or  any  of  them  are 
implied  either  at  common  law  or  from  the  Constitution. 

At  common  law,  a  carrier  is  not  bound  to  carry  except  on  his 
own  line,  and  we  think  it  quite  clear  that  if  he  contracts  to  go  be- 
yond he  may,  in  the  absence  of  statutory  regulations  to  the  con- 
trary, determine  for  himself  what  agencies  he  will  employ.  His 
contract  is  equivalent  to  an  extension  of  his  line  for  the  purposes 
of  the  contract,  and  if  he  holds  himself  out  as  a  carrier  beyond 
the  line,  so  that  he  may  be  required  to  carry  in  that  way  for  all 
alike,  he  may  nevertheless  confine  himself  in  carrying  to  the  par- 
ticular route  he  chooses  to  use.  (Re  puts  himself  in  no  worse 
position,  by  extending  his  route  with  the  help  of  others,  than  he 
would  occupy  if  the  means  of  transportation  employed  were  all  his 
own.  He  certainly  may  select  his  own  agencies  and  his  own  asso- 
ciates for  doing  his  own  work.' 

The  Atchison,  Topeka  &  Santa  Fe  Company,  as  the  lessee  of 
the  Pueblo  &  Arkansas  Valley  Railroad,  has  the  statutory  right  to 
establish  its  own  stations  and  to  regulate  the  time  and  manner  in 
which  it  will  carry  persons  and  property  and  the  price  to  be  paid 
therefor.  As  to  all  these  matters,  it  is  undoubtedly  subject  to  the 
power  of  legislative  regulation,  but  in  the  absence  of  regulation  it 
owes  only  such  duties  to  the  public,  or  to  individuals,  associations 
or  corporations,  as  the  common  law,  or  some  custom  having  the 
force  of  law,  has  established  for  the  government  of  those  in  its  con- 
dition. As  has  already  been  shown,  the  Constitution  of  Colorado 
gave  to  every  railroad  company  in  the  State  the  right  to  a  me- 
chanical union  of  its  road  with  that  of  any  other  company  in  the 
State,  but  no  more.  The  legislature  has  not  seen  fit  to  extend  this 
right,  as  it  undoubtedly  may,  and  consequently  the  Denver  &  New 
Orleans  Company  comes  to  the  Atchison,  Topeka  &  Santa  Fe  Com- 
pany just  as  any  other  customer  does,  and  with  no  more  rights.     It 


J 


I 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  Ill 

has  established  its  junction  and  provided  itself  with  the  means  of 
transacting  its  business  at  that  place,  but  as  yet  it  has  no  legislative 
authority  to  compel  the  other  company  to  adopt  that  station  or 
to  establish  an  agency  to  do  business  there.  So  far  as  statutory 
regulations  are  concerned,  if  it  wishes  to  use  the  Atchison,  Topeka 
&  Santa  Fe  road  for  business,  it  must  go  to  the  place  where  that 
company  takes  on  and  lets  off  passengers  or  property  for  others.  It 
has  as  a  railroad  company  no  statutory  or  constitutional  privileges 
in  this  particular  over  other  persons,  associations,  or  corporations. 
It  saw  fit  to  establish  its  junction  at  a  place  away  from  the  station 
which  the  Atchison,  Topeka  &  Santa  Fe  Company  had,  in  the  exer- 
cise of  its  legal  discretion,  located  for  its  own  convenience  and 
that  of  the  public.  It  does  not  now  ask  to  enter  that  station  with 
its  tracks  or  to  interchange  business  at  that  place,  but  to  compel 
the  Atchison,  Topeka  &  Santa  Fe  Company  to  stop  at  its  station 
and  transact  a  connecting  business  there.  No  statute  requires  that 
connected  roads  shall  adopt  joint  stations,  or  that  one  railroad  com- 
pany shall  stop  at  or  make  use  of  the  station  of  another.  Each 
company  in  the  State  has  the  legal  right  to  locate  its  own  stations, 
and,  so  far  as  statutory  regulations  are  coneerned,  is  not  required 
to- use  any  other. 

A  railroad  company  is  prohibited,  both  by  the  common  law  and 
by  the  Constitution  of  Colorado,  from  discriminating  unreason- 
ably in  favor  of  or  against  another  company  seeking  to  do  business 
on  its  road;  but  that  does  not  necessarily  imply  that  it  must  stop 
at  the  junction  of  one  and  interchange  business  there,  because  it 
has  established  joint  depot  accommodations  and  provided  facilities 
for  doing  a  connecting  business  with  another  company  at  another 
place.  A  station  may  be  established  for  the  special  accommodation 
of  a  particular  customer;  but  we  have  never  heard  it  claimed  that 
every  other  customer  could,  by  a  suit  in  equity,  in  the  absence  of  a 
statutory  or  contract  right,  compel  the  company  to  establish  a  like 
station  for  his  special  accommodation  at  some  other  place.  Such 
matters  are,  and  always  have  been,  proper  subjects  for  legislative 
consideration,  unless  prevented  by  some  charter  contract;  but, 
as  a  general  rule,  remedies  for  injustice  of  that  kind  can  only 
he  obtained  from  the  legislature.  (A  court  of  chancery  is  not,  any! 
more  than  is  a  court  of  law,  clothed  with  legislative  power.  It 
may  enforce,  in  its  own  appropriate  way,  the  specific  performance 
of  an  existing  legal  obligation  arising  out  of  contract,  law,  or 
Bsuage,  but  it  cannot  create  the  obligation.) 

In  the  present  case,  the  Atchison,  Topeka  &  Santa  Fe  and  the 
Denver  &  Eio  Grande  Companies  formed  their  business  connection 
and  established  their  junction  or  joint  station  long  before  the  Den- 


112  THE    SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

ver  &  New  Orleans  road  was  built.  The  Denver  &  New  Orleans 
Company  saw  fit  to  make  its  junction  with  the  Atchison, 
Topeka  &  Santa  Fe  Company  at  a  different  place.  Under  these  cir- 
cumstances, to  hold  that,  if  the  Atchison,  Topeka  &  Santa  Fe  con- 
tinued to  stop  at  its  old  station,  after  the  Denver  &  New  Orleans 
was  built,  a  refusal  to  stop  at  the  junction  of  the  Denver  &  New 
Orleans,  was  an  unreasonable  discrimination  as  to  facilities  in  favor 
of  the  Denver  &  Eio  Grande  Company,  and  against  the  Denver  & 
New  Orleans,  would  be  in  effect  to  declare  that  every  railroad  com- 
pany which  forces  a  connection  of  its  road  with  that  of  another 
company  has  a  right,  under  the  Constitution  or  at  the  common 
law,  to  require  the  company  with  which  it  connects  to  do  a  con- 
necting business  at  the  junction,  if  it  does  a  similar  business  with 
any  other  company  under  any  other  circumstances.  Such,  we  think, 
is  not  the  law.  It  may  be  made  so  by  the  legislative  department  of 
the  government,  but  it  does  not  follow,  as  a  necessary  consequence, 
from  the  constitutional  right  of  a  mechanical  union  of  tracks,  or 
the  constitutional  prohibition  against  undue  or  unreasonable  dis- 
crimination in  facilities. 

This  necessarily  disposes  of  the  question  of  a  continuous  busi- 
ness, or  a  through  line  for  passengers  or  freight,  including  through 
tickets,  through  bills  of  lading,  through  checking  of  baggage,  and 
the  like.  Such  a  business  does  not  necessarily  follow  from  a  con- 
nection of  tracks.  The  connection  may  enable  the  companies  to  do 
such  a  business  conveniently  when  it  is  established,  but  it  does  not 
of  itself  establish  the  business.  The  legislature  cannot  take  away 
the  right  to  a  physical  union  of  two  roads,  but  whether  a  connecting 
business  shall  be  done  over  them  after  the  union  is  made  depends 
on  legislative  regulation,  or  contract  obligation.  An  interchange 
of  cars,  or  the  hauling  by  one  company  of  the  cars  of  the  other,  im- 
plies  a  stop  at  the  junction  to  make  the  exchange  or  to  take  the' 
cars.  If  there  need  be  no  stop,  there  need  be  no  exchange  or 
taking  on  of  cars.^ 


SAEGENT  V.  BOSTON  AND  LOWELL  EAILROAD 

CORPORATION.  : 

115  Mass.  416.     1874.^ 

"Wells,  J.     This  action  is  founded  upon  the  supposed  obliga- 
tion of  the  defendants,  as  common  carriers,  to  provide  facilities, 

2  See  §  15  of  the  Interstate  Commerce  Act,  as  amended  in  1906,  Appendix, 
p.  506.  j 

1  The  statement  of  facts  is  omitted,  and  only  part  of  the  opinion  is  re-, 
printed. —  Ed. 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDEEED.  113 

and  accommodations  to  enable  the  plaintiff  to  transact  his  business 
as  expressman  over  and  upon  the  railroads  of  the  defendants.  For 
this  purpose  he  requires  that  his  merchandise  and  parcels  shall  be 
transported,  not  as  freight  under  the  general  charge  and  control 
of  the  managers  and  servants  of  the  railroads,  but  in  their  pas- 
senger trains  and  under  the  exclusive  control  and  supervision  of 
the  plaintiff  and  his  agents:  who  also  require  special  accommoda- 
tions and  facilities  in  the  cars  and  stations  of  the  defendants,  for 
the  receipt  and  distribution  of  their  packages.  It  is  not  alleged 
that  there  is  any  contract  for  such  service.  The  contract  which 
once  existed,  and  the  course  of  business  in  previous  j^ears,  are  re- 
cited for  the  purpose  of  showing  the  manner  in  which  the  business 
of  the  plaintiff  had  grown  up  and  the  good  will  connected  there- 
with had  been  gained,  as  bearing  upon  the  damages  caused  by  with- 
drawing from  him  the  means  for  its  further  prosecution.  The  com- 
plaint is,  that  under  the  guise  of  a  proposal  to  sell  or  let  the  privilege 
which  the  plaintiff  and  his  associates  had  before  enjoyed,  to  be 
used  exclusively  by  the  one  party  who  would  pay  most  for  it,  the  de- 
fendants had  in  fact  denied  it  to  all,  and  assumed  the  conduct  of 
the  business  of  express  carriage  and  parcel  delivery  by  its  own 
agents  and  servants. 

The  allegation  of  the  second  count,  that  the  defendants  had  re- 
fused to  receive  and  transport  articles  of  freight  for  the  plaintiff 
in  the  usual  modes  of  transportation  of  freight,  is  abandoned. 

We  know  of  no  principle  or  rule  of  law  which  imposes  upon  a 
railroad  corporation  the  obligation  to  perform  service  in  the  trans- 
portation of  freight,  otherwise  than  as  a  carrier  of  goods  for  the 
owner  in  accordance  with  their  consignment;  or  which  forbids  it 
from  establishing  uniform  regulations  applicable  alike  to  all  per- 
sons composing  the  public  to  whom  the  service  is  due.  We  are 
pointed  to  no  provision  in  the  charters  of  these  defendants,  or  in 
the  general  laws  relating  to  railroads,  which  subjects  the  use  of 
their  roads  to  the  convenience  or  requirements  of  other  carriers  than 
the  corporations  authorized  to  construct  and  operate  them,  and  such 
other  railroads  as  may  have  been  authorized  to  enter  upon  or  unite 
with  and  use  them.     Gen.  Sts.  c.  63,  §  117, 

All  the  provisions  of  law  for  the  regulation  of  railroads  contem- 
plate the  unlimited  exercise  by  the  corporation  of  the  rights  and 
duties  of  general  carriers  of  goods  and  passengers;  and  this  in- 
volves the  right  to  adopt  any  and  all  reasonable  rules  and  regu- 
lations to  direct  the  mode  in  which  their  business  shall  be  trans- 
acted. They  cannot  be  required  to  convert  their  passenger  trains 
to  the  purposes  of  freight  at  the  discretion  of  parties  not  respon- 
sible for  the  management  of  the  trains;  nor  can  they  be  compelled 


114  THE   SERVICE    TO    BE   RENDERED.  [CHAl*.    II. 

to  admit  others  than  their  own  agents  and  servants  upon  their 
trains  or  to  their  stations  for  the  custody,  care,  receipt  and  de- 
livery of  freight  or  parcels. 

Whether  the  defendants,  in  establishing  and  conducting  the  busi- 
ness of  their  own  "  parcel  department "  undertake  to  collect  and 
distribute  goods  and  parcels  in  a  manner  which  involves  acts  ultra 
vires,  does  not  alTect  the  question ;  nor,  if  they  do  so,  does  it  afford 
the  plaintiir  any  ground  of  action.  His  claim  is  for  their  re- 
fusal to  furnish  to  him  certain  claimed  facilities  upon  the  roads. 
That  refusal  does  not  involve  any  acts  or  exercise  of  powers  ultra 
vires. 

Nor  does  the  fact  that  for  many  years  the  defendants  did  afford 
certain  facilities  to  separate  and  independent  carriers,  as  express 
companies,  confer  any  right  upon  tliem  or  impose  any  obligation, 
either  of  contract  or  duty,  upon  the  defendants  to  continue  the 
same  unchanged. 

Whatever  may  have  been  contemplated,  when  the  charters  for 
these  roads  were  granted,  as  to  the  parties  by  whom  and  the  mode 
in  which  the  tracks  would  be  used  for  the  running  of  trains  or  car- 
riages upon  them,  and  the  manner  in  which  tolls  would  be  re- 
ceived, it  cannot  be  doubted  that  since  the  St.  of  1845,  c.  191,  the 
direction  of  the  use-  of  the  roads,  and  the  control  of  all  carriages 
upon  them,  are  exclusively  in  the  directors  of  the  corporations  own- 
ing them.  It  is  a  franchise  of  a  public  nature,  it  is  true ;  and  the 
directors  are  bound  to  conduct  its  exercise  with  a  view  to  public 
convenience.  But  they,  and  not  the  individual  members  of  the 
public,  are  intrusted  with  the  discretion,  autliority  and  duty,  in 
the  first  instance,  to  determine  what  the  public  convenience  re- 
quires. They  are  subject,  in  this  respect,  to  the  oversight  and  regu- 
lation of  the  legislature.  It  is  only  when  they  disregard  such  regu- 
lations as  are  provided  by  law,  or  required  by  a  reasonable  considera- 
tion of  the  public  convenience  and  the  purposes  of  their  charter, 
that  individuals  are  entitled  to  complain.^ 

2  The  plaintiff  also  contended  that  the  refusal  to  furnish  him  with  the 
facilities  which  he  desired  constituted  illegal  discrimination.  The  Court 
declared  that  this  could  not  he  so  when  the  company  was  not  furnishing  any 
one  else  with  such  facilities.  The  Court  concluded  that,  "  All  that  the 
plaintiff  can  demand  is  that,  in  each  of  those  branches  fof  defendant's 
business],  he  shall  have  equal  terms  with  other  persons  and  companies." —  Ed. 


SEC.    I.]  WHAT  SERVICE   MUST  BE   RENDERED.  115 


EXPEESS  CASES. 

117  U.   S.   1.     1886.^ 

Mr.  Chief  Justice  Waite  delivered  the  opinion  of  the  court. 

These  suits  present  substantially  the  same  questions  and  may 
properly  be  considered  together.  They  were  each  brought  by  an 
express  company  against  a  railway  company  to  restrain  the  railway 
company  from  interfering  with  or  disturbing  in  any  manner  the 
■facilities  theretofore  afforded  the  express  company  for  doing  its 
business  on  the  railway  of  the  railway  company. 

The  report  also  contains  a  copy  of  the  contract  between  Harnden 
and  the  New  Jersey  Steam  Navigation  Company,  the  owner  of  the 
Lexington,  dated  the  1st  of  August,  1839,  for  the  facilities  to  be 
afforded  Harnden  for  his  business,  on  the  steamers  of  that  com- 
pany. This  contract  was  similar  to  one  made  a  short  time  before 
with  the  Boston  and  New  York  Transportation  Company,  a  com- 
pany which  became  merged  in  the  New  Jersey  Steam  Navigation 
Company  August  1,  1839,  and  it  provided  that  Harnden,  in  con- 
sideration of  $350  per  month,  was  to  have  the  privilege  of  trans- 
porting in  the  steamers  of  the  company  between  New  York  and 
Providence,  via  Newport  and  Stoniugton,  not  to  exceed  once  each 
day  from  New  York  and  from  Providence,  "one  wooden  crate  of 
the  dimensions  of  five  feet  by  five  feet  in  width  and  height,  and  six 
feet  in  length  (contents  unknown)."  It  was  also  stipulated  and 
agreed  that  "  the  said  crate,  with  its  contents,  is  to  be  at  all  times 
exclusively  at  the  risk  of  the  said  William  F.  Harnden;  and  the 
said  New  Jersey  Steam  Navigation  Company  will  not,  in  any  event, 
be  responsible  either  to  him  or  his  employers  for  the  loss  of  any 
goods,  wares,  merchandise,  notes,  bills,  evidences  of  debts,  or 
property  of  any  and  every  description,  to  be  conveyed  or  transported 
by  him  in  said  crate,  or  otherwise,  in  any  manner,  in  the  boats  of 
the  said  company."  It  was  also  further  provided  that  Harnden 
should  attach  to  all  his  advertisements  for  business,  and  to  his  bills 
of  lading,  notices  in  the  form  of  that  at  the  foot  of  his  advertise- 
ment, a  copy  of  which  is  given  above,  and  that  he  should  not  violate 
any  of  the  provisions  of  the  post  office  laws,  or  interfere  with  the 
Navigation  Company  in  its  transportation  of  letters  or  papers,  or 
carry  powder,  nuitehies,  or  other  combustible  materials  of  any  kind 
calculated  to  endanger  the  safety  of  the  boats  or  the  property  or 
persons  on  board.     At  the  end  was  this  clause:     "And  that  this 

1  Tarts  of  tho  opinions  of  Mr.  Chief  Justice  Waite  and  of  Mb.  Justice 
MiLLEK  are  omitted. —  Ed. 


116  THE    SERVICE    TO    BE    RENDERED.  [CHAP.    II. 

contract  may  be  at  any  time  terminated  by  tlie  New  Jersey  Steam 
Navigation  Company,  or  by  the  said  Harnden,  upon  one  month's 
notice  given  in  writing." 

Such  was  the  beginning  of  the  express  business  which  now  has 
grown  to  an  enormous  size,  and  is  carried  on  all  over  the  United 
States  and  in  Canada,  and  has  been  extended  to  Europe  and  the 
West  Indies.  It  has  become  a  public  necessity,  and  ranks  in  im- 
portance with  the  mails  and  with  the  telegraph.  It  employs  for  the 
purposes  of  transportation  all  the  important  railroads  in  the  United 
States,  and  a  new  road  is  rarely  opened  to  the  public  without  being 
equipped  in  some  form  with  express  facilities.  It  is  used  in  almost 
every  conceivable  way,  and  for  almost  every  conceivable  purpose,  by 
the  people  and  by  the  government.  All  have  become  accustomed  to 
it,  and  it  cannot  be  taken  away  without  breaking  up  many  of  the 
long  settled  habits  of  business,  and  interfering  materially  with  the 
conveniences  of  social  life. 

In  this  connection  it  is  to  be  kept  in  mind  that  neither  of  the 
railroad  companies  involved  in  these  suits  is  attempting  to  deprive 
the  general  public  of  the  advantages  of  an  express  business  over 
its  road.  The  controversy,  in  each  case  is  not  with  the  public,  but 
with  a  single  express  company.  And  the  real  question  is  not 
whether  the  railroad  companies  are  autliorized  by  law  to  do  an 
express  business  themselves;  nor  whether  they  must  carry  express 
matter  for  the  public  on  their  passenger  trains,  in  the  immediate 
charge  of  some  person  specially  appointed  for  that  purpose;  nor 
whether  they  shall  carry  express  freights  for  express  companies  as 
they  carry  like  freights  for  the  general  public;  but  whether  it  is 
their  duty  to  furnish  the  Adams  Company  or  the  Southern  Com- 
pany facilities  for  doing  an  express  business  upon  their  roads  the 
same  in  all  respects  as  those  they  provide  for  themselves  or  afford 
to  any  other  express  company. 

When  the  business  began  railroads  were  in  their  infancy.  They 
were  few  in  number,  and  for  comparatively  short  distances.  There 
has  never  been  a  time,  however,  since  the  express  business  was 
started  that  it  has  not  been  encouraged  by  the  railroad  companies, 
and  it  is  no  doubt  true,  as  alleged  in  each  of  the  bills  filed  in  these 
cases,  that  "no  railroad  company  in  the  United  States  .  .  .  has 
ever  refused  to  transport  express  matter  for  the  public,  upon  the 
application  of  some  express  company,  of  some  form  of  legal  con- 
stitution. Every  railway  company  .  ,  .  has  recognized  the  right 
of  the  public  to  demand  transportation  by  the  railway  facilities 
which  the  public  has  permitted  to  be  created,  of  that  class  of  matter 
which  is  known  as  express  mattter."  Express  companies  have  un- 
doubtedly invested  their  capital  and  built  up  their  business  in  tbe 


SEC.    I.]  WHAT   SERVICE    MUST   BE   EENDERED.  IIT 

hope  and  expectation  of  securing  and  keeping  for  themselves  such 
railway  facilities  as  they  needed,  and  railroad  companies  have  like- 
wise relied  upon  the  express  business  as  one  of  their  important 
sources  of  income. 

/  But  it  is  neither  averred  in  the  bills,  nor  shown  by  the  testi- 
/mony,  that  any  railroad  company  in  the  United  States  has  ever 
held  itself  out  as  a  common  carrier  of  express  companies,  that  is  to 
say,  as  a  common  carrier  of  common  carriers.  On  the  contrary  it 
has  been  shown,  and  in  fact  it  was  conceded  upon  the  argument, 
that,  down  to  the  time  of  bringing  these  suits,  no  railroad  company 
had  taken  an  express  company  on  its  road  for  business  except  under 
some  special  contract,  verbal  or  written,  and  generally  written,  in 
which  the  rights  and  the  duties  of  the  respective  parties  were  care- 
fully fixed  and  defined.  These  contracts,  as  is  seen  by  those  in 
these  records,  vary  necessarily  in  their  details,  according  to  the 
varying  circumstances  of  each  particular  case,  and  according  to  the 
judgment  and  discretion  of  the  parties  immediately  concerned.  It 
also  appears  that,  with  very  few  exceptions,  only  one  express  com- 
pany has  been  allowed  by  a  railroad  company  to  do  business  on  its 
road  at  the  same  time.  In  some  of  the  States,  statutes  have  been 
passed  which,  either  in  express  terms  or  by  judicial  interpretation, 
require  railroad  companies  to  furnish  equal  facilities  to  all  express 
companies,  Gen.  Laws  N.  H,,  1878,  ch.  163,  §  3;  Eev.  Stat.  Maine, 
1883,  494,  ch.  51,  §  134;  but  these  are  of  comparative  recent  origin, 
and  thus  far  seem  not  to  have  been  generally  adopted. 

The  reason  is  obvious  why  special  contracts  in  reference  to  this 
business  are  necessary.  The  transportation  required  is  of  a  kind 
which  must,  if  possible,  be  had  for  the  most  part  on  passenger 
trains.  It  requires  not  only  speed,  but  reasonable  certainty  as  to 
the  quantity  that  will  be  carried  at  any  one  time.  As  the  things 
carried  are  to  be  kept  in  the  personal  custody  of  the  messenger  or 
other  employe  of  the  express  company,  it  is  important  that  a  cer- 
tain amount  of  car  space  should  be  specially  set  apart  for  the  busi- 
ness, and  that  this  should,  as  far  as  practicable,  be  put  in  the  ex- 
clusive possession  of  the  express  man  in  charge.  As  the  business 
to  be  done  is  "  express,"  it  implies  access  to  the  train  for  loading 
at  the  latest,  and  for  unloading  at  the  earliest,  convenient  moment. 
All  tliis  is  entirely  inconsistent  with  the  idea  of  an  express  business 
on  passenger .  trains  free  to  all  express  carriers.  Eailroad  com- 
panies are  by  law  carriers  of  both  persons  and  property.  Passen- 
ger trains  have  from  the  beginning  been  provided  for  the  trans- 
portation primarily  of  passengers  and  their  baggage.  This  must  be 
done  with  reasonable  promptness  and  with  reasonable  comfort  to  the 
passenger.     The  express  business  on  passenger  trains  is  in  a  de- 


118  THE    SERVICE    TO    BE    RENDERED,  [CHAP.    II. 

gree  subordinate  to  the  passenger  business,  and  it  is  consequently 
tlie  duty  of  a  railroad  company  in  arranging  for  the  express  to  see 
that  there  is  as  little  interference  as  possible  with  the  wants  of 
passengers.  This  implies  a  special  understanding  and  agreement 
as  to  the  amount  of  car  space  that  will  be  afforded,  and  the  condi- 
tions on  which  it  is  to  be  occupied,  the  particular  trains  that  can 
be  used,  the  places  at  which  they  shall  stop,  the  price  to  be  paid, 
and  all  the  varying  details  of  a  business  which  is  to  be  adjusted  be- 
tween two  public  servants,  so  that  each  can  perform  in  the  best 
manner  its  own  particular  duties.  All  this  must  necessarily  be  a 
matter  of  bargain,  and  it  by  no  means  follows  that,  because  a  rail- 
road company  can  serve  one  express  company  in  one  way,  it  can 
as  well  serve  another  company  in  the  same  way,  and  still  perform 
its  other  obligations  to  the  public  in  a  satisfactory  manner.  The 
car  space  that  can  be  given  to  the  express  business  on  a  passenger 
train  is,  to  a  certain  extent,  limited,  and,  as  has  been  seen,  that 
which  is  allotted  to  a  particular  carrier  must  be,  in  a  measure, 
under  his  exclusive  control.  No  express  company  can  do  a  success- 
ful business  unless  it  is  at  all  times  reasonably  sure  of  the  means 
it  requires  for  transportation.  On  important  lines  one  company 
will  at  times  fill  all  the  space  the  railroad  company  can  well  allow 
for  the  business.  If  this  space  had  to  be  divided  among  several 
companies,  there  might  be  occasions  when  the  public  would  be  put 
to  inconvenience  by  delays  which  could  otherwise  be  avoided.  So 
long  as  the  public  are  served  to  their  reasonable  satisfaction,  it  is 
a  matter  of  no  importance  who  serves  them.  The  railroad  com- 
pany performs  its  whole  duty  to  the  public  at  large  and  to  each 
individual  when  it  affords  the  public  all  reasonable  express  accom- 
modations. If  this  is  done  the  railroad  company  owes  no  duty  to 
the  public  as  to  the  particular  agencies  it  shall  select  for  that  pur- 
pose. The  public  require  the  carriage,  but  the  company  may  choose 
its  own  appropriate  means  of  carriage,  always  provided  they  are 
such  as  to  insure  reasonable  promptness  and  security. 

The  inconvenience  that  would  come  from  allowing  more  than 
one  express  company  on  a  railroad  at  the  same  time  was  appar- 
ently so  well  understood  both  by  the  express  companies  and  the 
railroad  companies  that  the  three  principal  express  companies, 
the  Adams,  the  American,  and  the  United  States,  almost  imme- 
diately on  their  organization,  now  more  than  thirty  years  ago,  by 
agreement  divided  the  territory  in  the  United  States  traversed  by 
railroads  among  themselves,  and  since  that  time  each  has  confined 
its  own  operations  to  the  particular  roads  which,  under  this  division, 
have  been  set  apart  for  its  special  use.  No  one  of  these  companies 
has  ever  interfered  with  the  other,  and  each  has  worked  its  al- 


SEC.    I.]  WHAT   SERVICE    MUST   BE   EENDERED.  119 

lotted  territory,  always  extending  its  lines  in  the  agreed  directions 
as  circumstances  would  permit. 

The  exact  question,  then,  is  whether  these  express  companies  can 
now  demand  as  -a  right  what  tliey  have  heretofore  had  only  as  by 
permission.  That  depends,  as  is  conceded,  on  whether  all  railroad 
companies  are  now  by  law  charged  with  the  duty  of  carrying  all 
express  companies  in  the  way  that  express  carriers  when  taken  are 
usually  carried,  just  as  they  are  with  the  duty  of  carrying  all  pas- 
sengers and  freights  when  offered  in  the  way  that  passengers  and 
freight  are  carried.  The  contracts  which  these  companies  once  had 
are  now  out  of  the  way,  and  the  companies  at  this  time  possess  no 
other  rights  than  such  as  belong  to  any  other  company  or  person 
wishing  to  do  an  express  business  upon  these  roads.  If  they  are 
entitled  to  the  relief  they  ask  it  is  because  it  is  the  duty  of  the 
railroad  companies  to  furnish  express  facilities  to  all  alike  who  de- 
mand them. 

The  constitutions  and  the  laws  of  the  States  in  which  the  roads 
are  situated  place  the  companies  that  own  and  operate  them  on  the 
footing  of  common  carriers,  but  there  is  nothing  which  in  positive 
terms  requires  a  railroad  company  to  carry  all  express  companies 
in  the  way  that  under  some  circumstances  they  may  be  able  with- 
out inconvenience  to  carry  one  company.  In  Kansas,  the  Missouri, 
Kansas  and  Texas  Company  must  furnish  sufficient  accommoda- 
tions for  the  transportation  of  all  such  express  freight  as  may  be 
offered,  and  in  each  of  the  States  of  Missouri,  Arkansas  and  Kansas 
railroad  companies  are  probably  prohibited  from  making  unreason- 
able discriminations  in  their  business  as  carriers,  but  this  is  all. 

Such  being  the  case,  the  right  of  the  express  companies  to  a  de- 
cree depends  upon  their  showing  the  existence  of  a  usage,  having 
the  force  of  law  in  the  express  business,  which  requires  railroad 
companies  to  carry  all  express  companies  on  their  passenger  trains 
as  express  carriers  are  usually  carried.  It  is  not  enough  to  es- 
tablish a  usage  to  carry  some  express  company,  or  to  furnish  the 
public  in  some  way  with  the  advantages  of  an  express  business 
over  the  road.  The  question  is  not  whether  these  railroad  com- 
panies must  furnish  the  general  public  with  reasonable  express 
facilities,  but  whether  they  must  carry  these  particular  express  car- 
riers for  the  purpose  of  enabling  them  to  do  an  express  business 
over  the  lines. 

In  all  these  voluminous  records  there  is  not  a  syllable  of  evi- 
dence to  show  a  usage  for  the  carriage  of  express  companies  on 
the  passenger  trains  of  railroads  unless  specially  contracted  for. 
While  it  has  uniformly  been  the  habit  of  railroad  companies  to 
arrange,  at  the  earliest  practicable  moment,  to  take  one  express 


120  THE    SERVICE   TO   BE    RENDERED.  [CHAP.    II. 

company  on  some  or  all  of  their  passenger  trains,  or  to  provide 
some  other  way  of  doing  an  express  business  on  their  lines,  it  has 
never  been  the  practice  to  grant  snch  a  privilege  to  more  than 
one  company  at  the  same  time,  unless  a  statute  or  some  special 
circumstances  made  it  necessary  or  desirable.  The  express  com- 
panies that  bring  these  suits  are  certainly  in  no  situation  to  claim  a 
usage  in  their  favor  on  these  particular  roads,  because  their  entry 
was  originally  under  special  contracts,  and  no  other  companies 
have  ever  been  admitted  except  by  agreement.  By  the  terms  of 
their  contracts  they  agreed  that  all  their  contract  rights  on  the 
roads  should  be  terminated  at  the  will  of  the  railroad  company. 
They  were  willing  to  begin  and  to  expand  their  business  upon 
this  understanding,  and  with  this  uncertainty  as  to  the  duration 
of  their  privileges.  The  stoppage  of  their  facilities  was  one  of  the 
risks  they  assumed  when  they  accepted  their  contracts,  and  made 
their  investments  under  them.  If  the  general  public  were  com- 
plaining because  the  railroad  companies  refused  to  carry  express 
matter  themselves  on  their  passenger  trains,  or  to  allow  it  to  be 
carried  by  others,  different  questions  would  be  presented.  As  it  is, 
we  have  only  to  decide  whether  these  particular  express  companies 
must  be  carried  notwithstanding  the  termination  of  their  special 
contract  rights. 

The  difficulty  in  the  cases  is  apparent  from  the  form  of  the  de- 
crees. As  express  companies  had  always  been  carried  by  railroad 
companies  under  special  contracts,  which  established  the  duty  of 
the  railroad  company  upon  the  one  side,  and  fixed  the  liability  of 
the  express  company  on  the  other,  the  court,  in  decreeing  the  car- 
riage, was  substantially  compelled  to  make  for  the  parties  such  a 
contract  for  the  business  as  in  its  opinion  they  ought  to  have 
made  for  themselves.  Having  found  that  the  railroad  company 
should  furnish  the  express  company  with  facilities  for  business,  it 
had  to  define  what  those  facilities  must  be,  and  it  did  so  by  de- 
claring that  they  should  be  furnished  to  the  same  extent  and  upon 
the  same  trains  that  the  company  accorded  to  itself  or  to  any  other 
company  engaged  in  conducting  an  express  business  on  its  line.  It 
then  prescribed  the  time  and  manner  of  making  the  payment  for 
the  facilities  and  how  the  payment  should  be  secured,  as  well  as 
how  it  should  be  measured.  Thus,  by  the  decrees,  these  railroad 
companies  are  compelled  to  carry  these  express  companies  at  these 
rates,  and  on  these  terms,  so  long  as  they  ask  to  be  carried,  no  mat- 
ter what  other  express  companies  pay  for  the  same  facilities  or 
what  such  facilities  may,  for  the  time  being,  be  reasonably  worth, 
unless  the  court  sees  fit,  under  the  power  reserved  for  that  purpose, 
on  the  application  of  either  of  the  parties,  to  change  the  measure 


SEC.   I.]  "WHAT   SERVICE    MUST   BE   REXDEKED.  121 

of , compensation.  In  this  way  as  it  seems  to  us,  "the  court  has 
made  an  arrangement  for  the  business  intercourse  of  these  com- 
panies, such  as,  in  its  opinion,  they  ought  to  have  made  for  them- 
selves," and  that,  we  said  in  Atchison,  Topeka  and  Santa  Fe  Eail- 
road  Co.  v.  Denver  &  New  Orleans  Eailroad  Co.,  110  U.  S.  667, 
followed  at  this  term  in  Pullman's  Palace  Car  Co.  v.  Missouri  Pacific 
Eailway  Co.,  115  U.  S.  587,  could  not  be  done.  The  regulation 
of  matters  of  this  kind  is  legislative  in  its  character,  not  judicial. 
To  what  extent  it  must  come,  if  it  comes  at  all,  from  Congress, 
and  to  what  extent  it  may  come  from  the  States,  are  questions  we 
do  not  now  undertake  to  decide ;  but  that  it  must  come,  when  it  does 
come,  from  some  source  of  legislative  power,  we  do  not  doubt. 
The  legislature  may  impose  a  duty,  and  when  imposed  it  will,  if 
necessary,  be  enforced  by  the  courts,  but,  unless  a  duty  has  been 
created  either  by  usage  or  by  contract,  or  by  statute,  the  courts  can- 
not be  called  on  to  give  it  effect. 

The  decree  in  each  of  the  cases  is  reversed,  and  the  suit  is  re- 
manded, with  directions  to  dissolve  the  injunction,  and,  after 
adjusting  the  accounts  between  the  parties  for  business  done 
while  the  injunctions  were  in  force,  and  decreeing  the  payment 
of  any  amounts  that  may  be  found  to  be  due,  to  dismiss  the 
bills. 

Mr.  Justice  Miller  dissenting. 

I  only  desire  to  add  one  or  two  observations  in  regard  to  mat- 
ters found  in  the  opinion  of  this  court. 

1.  The  relief  sought  in  these  cases  is  not  sought  on  the  ground 
of  usage  in  the  sense  that  a  long  course  of  dealing  with  the  public 
has  established  a  custom  in  the  nature  of  law.  Usage  is  only  re- 
lied on  as  showing  that  the  business  itself  has  forced  its  way  into 
general  recognition  as  one  of  such  necessity  to  the  public,  and  so 
distinct  and  marked  in  its  character,  that  it  is  entitled  to  a  con- 
sideration different  from  other  modes  of  transportation. 

2.  It  is  said  that  the  regulation  of  the  duties  of  carrying  by  the 
railroads,  and  of  the  compensation  they  shall  receive,  is  legislative 
in  its  character,  and  not  judicial. 

As  to  the  duties  of  the  railroad  company,  if  they  are  not,  as 
common  carriers,  under  legal  obligation  to  carry  express  matter 
for  any  one  engaged  in  that  business  in  the  manner  appropriate 
and  usual  in  such  business,  then  there  is  no  case  for  the  relief 
sought  in  these  bills.  But  if  they  are  so  bound  to  carr}^,  then 
in  the  absence  of  any  legislative  rule  fixing  their  compensation 
I  maintain  that  that  compensation  is  a  judicial  question. 

It  is,  then,  the  ordinary  and  ever-recurring  question  on  a  quantum 


122  THE   SERVICE   TO    BE    RENDERED.  [CHAP.    II. 

meruit.  The  railroad  company  renders  the  service  which,  by  the 
law  of  its  organization,  it  is  bound  to  render.  The  express  com- 
pany refuses  to  pay  for  this  the  price  which  the  railroad  company 
demands,  because  it  believes  it  to  be  exorbitant.  That  it  is  a  judicial 
question  to  determine  what  shall  be  paid  for  the  service  rendered, 
in  the  absence  of  an  express  contract,  seems  to  me  beyond  doubt. 

That  the  legislature  maij,  in  proper  case,  fix  the  rule  or  rate 
of  compensation,  I  do  not  deny.  But  until  this  is  done  the  court 
must  decide  it,  when  it  becomes  matter  of  controversy. 

The  opinion  of  the  court,  while  showing  its  growth  and  impor- 
tance, places  the  entire  express  business  of  the  country  wholly  at 
the  mercy  of  the  railroad  companies,  and  suggests  no  means  by 
which  they  can  be  compelled  to  do  it.  According  to  the  principles 
there  announced,  no  railroad  company  is  bound  to  receive  or  carry 
an  express  messenger  or  his  packages.  If  they  choose  to  reject  him 
or  his  packages,  they  can  throw  all  the  business  of  the  country 
back  to  the  crude  condition  in  which  it  was  a  half  century  ago, 
before  Harnden  established  his  local  express  between  the  large  At- 
lantic cities;  for,  let  it  be  remembered,  that  plaintiffs  have  never 
refused  to  pay  the  railroad  companies  reasonable  compensation 
for  their  services,  but  those  companies  refuse  to  carry  for  them 
at  any  price  or  under  any  circumstances. 

I  am  very  sure  such  a  proposition  as  this  will  not  long  be 
acquiesced  in  by  the  great  commercial  interests  of  the  country  and 
by  the  public,  whom  both  railroad  companies  and  the  express  men 
are  intended  to  serve.  If  other  courts  should  follow  ours  in  this 
doctrine,  the  evils  to  ensue  will  call  for  other  relief. 

It  is  in  view  of  amelioration  of  these  great  evils  that,  in  dis- 
senting here,  I  announce  the  principles  which  I  earnestly  believe 
ought  to  control  the  actions  and  the  rights  of  these  two  great  public 
services. 

Mr.  Justice  Field  dissenting. 

I  agree  with  Mr.  Justice  Miller  in  the  positions  he  has  stated, 
although  in  the  cases  just  decided  I  think  the  decrees  of  the  courts 
below  require  modification  in  several  particulars;  they  go  too,..far. 
But  I  am  clear  that  railroad  companies  are  bound,  as  common  car- 
riers, to  accommodate  the  public  in  the  transportation  of  goods  ac- 
cording to  its  necessities,  and  through  the  instrumentalities  or  in 
the  mode  best  adapted  to  promote  its  convenience.  Among  these 
instrumentalities  express  companies,  by  the  mode  in  which  their 
business  is  conducted,  are  the  most  important  and  useful. 

Mr.  Justice  Matthews  took  no  part  in  the  decision  of  these 
cases. 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  133 

STATE  V.  EEED. 

76  Miss.  211.     1898.^ 

Woods,  C.  J.  Joseph  Eeed,  the  appellee,  was  arrested  upon  affi- 
davit charging  him  with  trespassing  upon  private  premises  belong- 
ing to  the  Alabama  &  Vicksburg  Eailroad  Company,  and  was,  be- 
fore the  justice  of  the  peace,  tried  and  convicted.  He  appealed  from 
that  conviction  to  the  circuit  court  of  Warren  county,  and  was 
there  tried  upon  an  agreed  statement  of  facts,  and  was  by  the  judg- 
ment of  that  court  acquitted  of  the  charge  and  discharged.  From 
this  judgment  of  the  circuit  court,  the  state  prosecutes  this  appeal. 

The  agreed  statement  of  facts  distinctly  states  the  question  to 
be  decided  by  us,  and  to  that  we  must  confine  ourselves.  Says  the 
agreed  statement:  "It  is  contended  that  the  said  company  had 
the  right  to  make  the  said  contract,  and  thus  exclude  the  defendant 
and  others  than  the  said  Peine  from  the  said  inclosure,  and  to 
grant  to  the  said  Peine  the  exclusive  right  to  enter  the  said  in- 
closure for  the  purpose  of  there  soliciting  passengers  for  his  hack 
line.  Defendant  controverts  this  position,  in  so  far  as  it  is  claimed 
that  the  said  company  can  grant  the  exclusive  right  to  any  par- 
ticular person  to  enter  the  said  inclosure  with  his  hack,  and  there 
solicit  passengers,  and  contends  that  the  railway  company  must 
exclude  all  or  admit  all  into  the  said  inclosure,  so  long  as  they  con- 
duct themselves  in  an  orderly  and  peaceable  manner." 

The  single  issue  thus  sharply  defined,  viz :  Has  a  railway  the  right 
to  confer  upon  on^  hackman  the  exclusive  privilege  of  entering  with 
his  hacks  its  inclosed  stationhouse  grounds,  and  of  soliciting  incom- 
ing passengers,  and  to  exclude  all  others  from  the  inclosure,  such 
privilege  conferring  advantages  upon  the  favored  hackman,  and  dis- 
criminating against  all  other  hackmen  by  forbidding  them  to  enter 
the  inclosure  to  solicit  passengers,  and  by  placing  the  hacks  of 
those  excluded  150  feet  from  the  depot,  and  in  an  open  street? 
The  question  has  never  before  been  presented  in  our  courts,  but  it 
is  by  no  means  a  new  one,  and  has  been  passed  upon  in  other  juris- 
dictions. 

Quite  independently  of  constitutional  or  statutory  provisions, 
it  seems  to  be  the  prevailing  doctrine  in  the  United  States 
that  a  railroad  company  may  make  any  necessary  and  reasonable 
rules  for  the  government  of  persons  using  its  depots  and  grounds, 
yet  it  cannot  arbitrarily,  for  its  own  pleasure  or  profit,  admit  to  its 
platforms  or  depot  grounds  one  carrier  of  passengers  or  merchan- 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion  are 
omitted. —  Ed. 


124  THE    SERVICE   TO   BE   RENDERED.  [CHAP.    II. 

dise,  and  at  the  same  time  exclude  all  others.  The  question  is  one 
that  affects  not  only  the  excluded  hackmen;  it  affects  the  interests 
of  the  public.  The  upholding  of  the  grant  of  this  exclusive  priv- 
ilege would  prevent  competition  between  the  rival  carriers  of  passen- 
gers, create  a  monopoly  in  the  privileged  hackmen,  and  might  pro- 
duce inconvenience  and  loss  to  persons  traveling  over  the  railroad,  or 
those  having  freights  transported  over  it,  in  cases  of  exclusion  of 
drays  and  wagons  from  its  grounds,  other  than  those  owned  by  the 
person  having  the  exclusive  right  to  enter  the  railroad's  depot 
grounds.  To  concede  the  right  claimed  by  the  railway  in  the  pres- 
ent case  would  be,  in  effect,  to  confer  upon  the  railway  company 
the  control  of  the  transportation  of  passengers  beyond  its  own  lines, 
and  in  the  end  to  create  a  monopoly  of  such  business,  not  granted 
by  its  charter,  and  against  the  interests  of  the  public.  These  are 
the  views  ably  urged  in  Kalamazoo  Hack  Co.  v.  Sootsma,  84.  Mich. 
194;  Montana  Union  Eailway  Co.  v.  Langlois,  9  Mont.  419; 
Cravens  v.  Eodgers,  101  Mo.  247 ;  and  McConnell  v.  Pedigo,  92  Ky. 
465.  These  are  the  views  held,  too,  by  the  three  dissenting  judges 
in  the  case  of  Old  Colony  Eailroad  Co.  v.  Tripp,  147  Mass.  35-41. 
The  majority  of  the  judges  in  that  case  held  that  a  railroad  might 
grant  to  one  an  exclusive  right  to  solicit  the  patronage  of  incoming 
passengers ;  but  this  is  the  only  American  case  making  that  distinct 
holding,  and  that  opinion  was  delivered  by  four  judges,  the  other 
three  members  of  the  court  vigorously  dissenting,  and  with  better 
show  of  reasoning,  in  our  judgment.  The  cases  of  Barney  v. 
Oyster  Bay  and  Huntington  Steamboat  Co.,  67  N.  Y.  31,  Fluker  v. 
Georgia  Eailroad  &  Banking  Co.,  81  Ga.  461,  and  Cole  v.  Eowen,  88 
Mich.  219,  do  not  present  the  precise  point  involved  in  the  case 
before  us.  They  are  all  decisions  of  other  questions,  and  can  be 
readily  distinguished  from  the  ease  in  hand. 

Counsel  for  appellant  think  that  in  Cole  v.  Eowen,  88  Mich.  219, 
the  supreme  court  of  Michigan  has  swung  away  from  the  doctrine 
announced  in  the  earlier  case  of  Kalamazoo  Hack  Co.  v.  Sootsma, 
84  Mich.  194.  But  that  very  able  court  did  not  so  think,  and  was 
careful  to  disabuse  the  mind  of  counsel,  who  seems  to  have  the 
notion  which  counsel  here  puts  forward,  and  the  court  clearly  dis- 
tinguished the  two  cases. 

We  are  of  opinion  that  the  railroad  had  no  right  to  exclude  Eeed, 
the  appellee,  from  its  depot  and  inclosed  grounds,  on  the  facts 
appearing  in  the  agreed  statement  on  which  the  case  is  submitted 
to  us,  and  hence  that  the  action  of  the  court  below  in  discharging 
Joseph  Eeed  was  correct. 


SEC.    I.]  WHAT   SERVICE    MUST   BE   EEXDERED.  125 


DOXOYAX  V.  PEXXSYLYAXIA  CO. 

199  U.  S.  279.     1905.^ 

Mr.  Justice  Harlax  delivered  the  opinion  of  the  court. 

Upon  the  pleadings  two  principal  inquiries  arise :  First,  whether 
the  Pennsylvania  Company,  having  made  an  arrangement  with  the 
Parmelee  Transfer '  Company  to  furnish,  at  its  passenger  station, 
from  time  to  time,  all  vehicles  necessary  for  the  accommodation  of 
passengers  arriving  there  on  its  trains  or  on  the  trains  of  other 
railroad  companies,  may  legally  exclude  from  its  depot  grounds  or 
passenger  station  all  hackmen  or  expressmen  coming  to  either  for 
the  purpose  only  of  soliciting  for  themselves  the  custom  or  patron- 
age of  passengers. 

Applying  these  principles  to  the  case  before  us,  it  would  seem 
to  be  clear  that  the  Pennsylvania  Company  had  the  right  —  if  it 
was  not  its  legal  duty  —  to  erect  and  maintain  a  passenger  station 
and  depot  buildings  in  Chicago  for  the  accommodation  of  pas- 
sengers and  shippers  as  well  as  for  its  own  benefit ;  and  that  it  was 
its  duty  to  manage  that  station  so  as  to  subserve,  primarily,  the 
convenience,  comfort,  and  safety  of  passengers  and  the  wants  of 
shippers.  It  was  therefore  its  duty  to  see  to  it  that  passengers 
were  not  annoyed,  disturbed,  or  obstructed  in  the  use  either  of  its 
station  house  or  of  the  grounds  over  which  such  passengers,  whether 
arriving  or  departing,  would  pass.  It  was  to  that  end  —  primarily, 
as  we  may  assume  from  the  record  —  that  the  Pennsylvania  Com- 
pany made  an  arrangement  with  a  single  company  to  supply  all 
vehicles  necessary  for  passengers.  We  cannot  say  that  that  ar- 
rangement was  either  unnecessary,  unreasonable,  or  arbitrary;  on 
the  contrary,  it  is  easy  to  see  how,  in  a  great  city,  and  in  a  con- 
stantly crowded  railway  station,  such  an  arrangement  might  pro- 
mote the  comfort  and  convenience  of  passengers  arriving  and  de- 
parting, as  well  as  the  efficient  conduct  of  the  company's  business. 
The  record  does  not  show  that  the  arrangement  referred  to  was 
inadequate  for  the  accommodation  of  passengers.  But  if  inade- 
quate, or  if  the  transfer  company  was  allowed  to  charge  exorbitant 
prices,  it  was  for  passengers  to  complain  of  neglect  of  duty  by  the 
railroad  company,  and  for  the  constituted  authorities  to  take  steps 
to  compel  the  company  to  perform  its  public  functions  with  due  re- 
gard to  the  rights  of  passengers.  The  question  of  any  failure  of 
the  company  to  properly  care  for  the  convenience  of  passengers 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion  are 
omitted. —  Ed. 


126  THE   SERVICE    TO    BE   RENDERED.  [CHAP.    II. 

was  not  one  that,  in  any  legal  aspect,  concerned  the  defendants  as 
licensed  hackmen  and  cabmen.  It  was  not  for  them  to  vindicate 
the  riglits  of  passengers.  They  only  sought  to  use  the  property  of 
the  railroad  company  to  make  profit  in  the  prosecution  of  their 
particular  business.  A  hackman,  in  nowise  connected  with  the  rail- 
road company,  cannot,  of  right  and  against  the  objections  of  the 
company,  go  upon  its  grounds  or  into  its  station  or  cars  for  the 
purpose  simply  of  soliciting  the  custom  of  passengers ;  but,  of  course, 
a  passenger,  upon  arriving  at  the  station,  in  whatever  vehicle,  is  en- 
titled to  have  such  facilities  for  his  entering  the  company's  depot 
as  may  be  necessary. 

Here  the  defendants  press  the  suggestion  that  they  are  entitled 
to  the  same  rights  as  were  accorded  by  special  arrangement  to  the 
Parmelee  Transfer  Company.  They  insist,  in  effect,  that,  as  car- 
riers of  passengers,  they  are  entitled  to  transact  their  business  at 
any  place  which,  under  the  authority  of  law,  is  devoted  primarily  to 
public  uses, —  certainly,  at  any  place  open  to  another  carrier  en- 
gaged in  the  same  kind  of  business.  But  this  contention,  when  ap- 
plied to  the  present  case,  cannot  be  sustained.  The  railroad  com- 
pany was  not  bound  to  accord  this  particular  privilege  to  the  de- 
fendants simply  because  it  had  accorded  a  like  privilege  to  the 
Parmelee  Transfer  Company;  for  it  had  no  contractual  relations 
with  the  defendants,  and  owed  them,  as  hackmen,  no  duty  to  aid 
them  in  their  special  calling.  The  defendants  did  not  have,  or  pro- 
fess to  have,  any  business  of  their  own  with  the  company.  In 
meeting  their  obligations  to  the  public,  whatever  the  nature  of 
those  obligations,  the  defendants  could  use  any  property  owned  by 
them,  but  they  could  not,  of  right,  use  the  property  of  others 
against  their  consent.  In  maintaining  a  highway,  under  the  author- 
ity of  the  state,  the  first  and  paramount  obligation  of  the  railroad 
company  was,  as  we  have  already  said,  to  consult  the  comfort  and 
convenience  of  the  public  who  used  that  highway.  To  that  end  it 
could  use  all  suitable  means  that  were  not  forbidden  by  law.  In 
its  discretion  it  could  accept  the  aid  or  stipulate  for  the  services 
of  others.  But,  after  providing  fully  for  the  wants  of  passengers 
and  shippers,  it  did  not  undertake,  expressly  or  by  implication,  to 
so  use  its  property  as  to  benefit  those  who  had  no  business  or  con- 
nection with  it.  It  is  true  that  by  its  arrangement  with  the  rail- 
road company  the  Parmelee  company  was  given  an  opportunity  to 
control,  to  a  great  extent,  the  business  of  carrying  passengers  from 
the  Union  Passenger  Station  to  other  railway  stations  and  to  hotels 
or  private  houses  in  Chicago.  But  in  a  real,  substantial,  legal 
sense,  that  arrangement  cannot  be  regarded  as  a  monopoly  in  the 
odious  sense  of  that  word,  nor  does  it  involve  an  improper  use  by 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  127 

the  railroad  company  of  its  property.  That  arrangement  is  to  be 
deemed,  not  unreasonably,  a  means  devised  for  the  convenience  of 
passengers  and  of  the  railroad  company,  and  as  involving  such  use 
by  the  company  of  its  property  as  is  consistent  with  the  proper 
performance  of  its  public  duties  and  its  ownership  of  the  property 
in  question.  If  the  company,  by  such  use  of  its  property,  also 
derived  pecuniary  profit  for  itself,  that  was  a  matter  of  no  con- 
cern to  the  defendants,  and  gave  them  no  ground  of  complaint. 

In  the  Express  Cases,  117  U.  S.  1,  24,  which  involved  a  general 
inquiry  as  to  the  respective  rights  of  railroad  and  express  companies 
in  respect  of  the  use  of  railroads  for  the  transportation  of  express 
parcels,  this  court  said :  "  So  long  as  the  public  are  served  to  their 
reasonable  satisfaction,  it  is  a  matter  of  no  importance  who  serves 
them.  The  railroad  company  performs  its  whole  duty  to  the  public 
at  large  and  to  each  individual  when  it  affords  the  public  all  reason- 
able express  accommodations.  If  this  is  done,  the  railroad  company 
owes  no  duty  to  the  public  as  to  the  particular  agencies  it  shall  select 
for  that  purpose.  The  public  require  the  carriage,  but  the  company 
may  choose  its  own  appropriate  means  of  carriage,  always  provided 
they  are  such  as  to  insure  reasonable  promptness  and  security." 

In  Chicago,  St.  L.  &  N.  0.  E.  Co.  v.  Pullman  Southern  Car  Co. 
139  U.  S.  79,  89,  one  of  the  questions  was  as  to  the  validity 
of  a  contract  between  a  railroad  company  and  the  Pullman  Com- 
pany, whereby  the  latter  was  given  the  exclusive  right  for  fif- 
teen years  to  furnish  drawing-room  and  sleeping  cars  to  be  used 
by  the  former,  and  whereby,  also,  the  railroad  company  stipulated 
that  during  that  term  it  would  not  contract  to  give  a  like  priv- 
ilege to  other  sleeping  car  companies.  That  contract  was  assailed 
as  one  in  restraint  of  trade  and  as  being  against  public  policy. 
This  court  said :  "  The  authorities  cited  in  support  of  this  con- 
tention have  no  application  to  such  a  contract  as  the  one  be- 
fore us.  The  defendant  was  under  a  duty  arising  from  the 
public  nature  of  its  employment  to  furnish  for  the  use  of  pas- 
sengers on  its  lines  such  accommodations  as  were  reasonably  re- 
quired by  the  existing  conditions  of  passenger  traffic.  Its  duty 
as  a  carrier  of  passengers  was  to  make  suitable  provisions  for 
their  comfort  and  safety.  Instead  of  furnishing  its  own  draw- 
ing-room and  sleeping  cars,  as  it  might  have  done,  it  employed  the 
plaintiff,  whose  special  business  was  to  provide  cars  of  that  char- 
acter, to  supply  as  many  as  were  necessary  to  meet  the  require- 
ments of  travel.  It  thus  used  the  instrumentality  of  another  cor- 
poration in  order  that  it  might  properly  discharge  its  duty  to  the 
public.  So  long  as  the  defendant's  lines  were  supplied  with  the 
requisite  number  of  drawing-room  and  sleeping  cars,  it  was  a  matter 


138  THE    SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

of  indifference  to  the  public  who  owned  them.     Express  Cases,  117 
V.  S.  1." 

The  views  we  have  expressed  find  more  or  less  support  in  numer- 
ous adjudged  cases,  some  of  which  are  cited  in  the  margin.^  There 
are  cases  to  the  contrary,  but,  in  our  opinion,  the  better  view,  the 
one  sustained  by  the  clear  weight  of  authority  and  by  sound  reason 
and  public  policy,  is  that  which  we  have  expressed.^ 

sjencks  v.  Coleman,  2  Sumn.  221;  The  D.  R.  Martin,  11  Blatchf.  233; 
Com.  V.  Power,  7  Met.  506 ;  Barney  v.  Oyster  Bay  S.  B.  Co.,  67  N.  Y.  301 ; 
Old  Colony  B.  Co.  v.  Tripp,  147  Mass.  3.5;  Com.  v.  Carey,  147  Mass.  40; 
State  ex  rel.  Sheets  v.  Union  Depot  Co.,  71  Ohio  St.  37!>;  Nori'olk  &  W.  II. 
Co.  V.  Old  Dominion  Baggage  Co.,  09  Va.  Ill;  Fluker  v.  Georgia  Railroad 
Co.,  81  Ga.  461;  Griswold  v.  Webb,  16  R.  I.  ( J40 ;  Summitt  v.  State,  76 
Tenn.  413 ;  New  York  &c.  R.  R.  Co.  v.  Scovill,  71  Conn.  136 ;  Kates  v.  Cab 
Co.,  107  Ga.  636;  Godbout  v.  St.  Paul  Union  Depot,  70  Minn.  188;  Boston 
&  Albany  R.  R.  Co.  v.  Brown,  177  Mass.  65 ;  Boston  &  Maine  R.  R.  Co.  v. 
Sullivan,  177  Mass.  230;  New  York  &c.  R.  R.  Co.  v.  Bork,  23  R.  I.  218; 
St.  Louis  Drayage  Co.  v.  Louisville,  &c..  R.  R.  Co.,  65  Fed.  Rep.  39;  Red- 
ding V.  Gallagher,  72  N.  H.  377. 

3  Compare  the  following  cases:  Barker  v.  Midland  Ry.  Co.  (1856),  18 
C.  B.  46,  in  which  plaintiff  brought  action  for  damages  for  exclusion  from 
defendant's  premises,  when  desiring  to  enter  with  his  omnibus  for  the  pur- 
pose of  setting  down  passengers  and  goods,  and  for  the  purpose  of  taking 
up  passengers  who  had  previously  engaged  him,  other  omnibus  driver.s 
being  allowed  to  enter  for  such  purposes.  One  count  was  based  upon  the 
Railway  and  Canal  Traffic  Act,  1854,  which  requires  that  all  reasonable 
facilities  shall  be  afforded  for  receiving  and  delivering  traffic,  and  forbids 
any  undue  preference  to  any  particular  person  or  company,  or  any  par- 
ticular description  of  traffic  in  any  respect  whatever.  Judgment  was  ren- 
dered for  defendants.  Crowder,  J.,  said :  "  This  is  not  an  action  brought 
by  a  person  wishing  to  travel  by  the  defendant's  railway  or  to  send  goods 
by  it ;  but  by  a  person  who  carries  to  and  from  the  railway  persons  who 
are  desirous  of  using  or  who  have  used  the  railway.  He  clearly  is  not  a 
person  who  can  complain  of  an  obstruction.  As  to  the  fourth  count,  the 
Railway  and  Canal  Traffic  Act,  1854,  is  confined  to  the  affording  facilities 
to  persons  using  or  desiring  to  use  a  railway  or  canal.  If  any  obstruction 
be  aft'orded  in  such  a  case,  the  party  may  avail  himself  of  the  remedy  pro- 
vided by  the  act."  The  above  case  was  quoted  and  approved  in  the  House 
of  Lords  in  Perth  General  Station  Committee  v.  Ross  [1807]  A.  C.  470,  493. 

In  re  Marriott  (1857),  1  C.  B.  (N.  S.)  499,  in  which  an  injunction  was 
sought  under  the  Railway  and  Canal  Traffic  Act,  1854,  directing  the  Lon- 
don and  South  Western  Ry.  Co.  to  admit  Marriott's  omnibus  into  the  sta- 
tion yard  for  the  purpose  of  delivering  and  receiving  traffic.  It  appeared 
that  other  omnibuses  were  allowed  to  enter  the  yard  for  such  purposes,  and 
that  passengers  coming  and  leaving  by  Marriott's  omnibus  were  greatly  in- 
convenienced. Marriott's  omnibus  went  to  certain  outlying  towns  not 
served  by  the  omnibuses  admitted  to  the  station  yard.  The  injunction  was 
granted.  Crowder,  J.,  said :  "  I  also  am  of  the  opinion  that  this  rule 
should  be  made  absolute  to  the  extent  stated  by  the  Lord  Chief  .Justice, 
on  the  ground  that  the  company,  by  the  course  of  conduct  pursued  by  them 
toward  the  complainant,  have  subjected  him  and  his  passengers  to  a  greater 
degree  of  inconvenience  than  the  passengers  by  Williams's  omnibus  have 
been  subjected  to.  For  instance,  all  passengers  who  come  from  Teddingtou 
and  Hampton  Wick  by  the  complainant's  omnibus  are  subjected  to  the  in- 
convenience of  being  set  down  at  the  gate  of  the  station  yard,  whereas  Wil- 
liams's coming  from  Kensington  and  Norbiton  are  allowed  to  be  driven  into 
the  yard  and  up  to  the  door  of  the  booking-office.  That  is  clearly  giving 
the  one  set  of  passengers  an  undue  and  unreasonable  preference  and  advan- 
tage over  the  others,  and  constitutes  one  of  those  cases  in  which  the  legis- 
lature has  by  the  recent  statute  authorized  us  to  interfere."  By  In  re 
Beadell  (18.57),  2  C.  B.  (N.  S.)  .500,  the  authority  of  //;  re  INIarriott,  is 
restricted  to  cases  where  the  exclusion  of  the  omnibus  ownpr  or  hackman 
has  been  injurious  to  patrons  of  the  load. 

Griswold  v.  Webb  (1889),  16  R.  I.  649,  where  a  hack  driver,  having  been 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  139 

WESTERX  UNION  TELEGEAPH  CO.  v.  SIMMONS. 

93  S.  W.   (Tex.  Civ.  App.)   686.     1906.^ 

Tin's  was  an  action  for  damages  for  refusal  to  receive  and  trans- 
mit a  message  destined  for  a  point  on  the  line  of  another  telegraph 
company. 

Fly,  J.  Telegraph  companies  are  public  agencies,  chartered  for 
public  purposes,  and  vested  with  the  right  of  eminent  domain  in 
the  condemnation  of  private  property  for  their  use.  With  the 
grant  of  these  powers  and  privileges  there  goes  the  duty,  for  a 
reasonable  consideration,  to  receive  and  transmit  all  messiiges  over 
their  lines  with  promptness,  skill  and  despatch.  Joyce,  Elec.  Law, 
sec.  14,  and  authorities  noted.  The  law  relating  to  the  receiving 
and  forwarding  of  telegraphic  messages  to  connecting  lines  is  so 
nearly  analogous  to  that  in  regard  to  common  carriers  that  the  es- 
tablished rules  of  law  that  determine  the  liability  of  the  common 
carrier  apply  with  equal  force  to  telegraph  companies.  Each  can 
restrict  its  liability  to  its  own  line,  but  each  must  receive  and  for- 
ward with  diligence  to  the  connecting  line,  and  each  will  be  held 
liable  for  its  failure  or  refusal  to  perform  that  duty.  Smith  v. 
Tel.  Co.,  84  Tex.  359,  19  S.  W.  441,  31  Am.  St.  Eep.  59. 


ALBANY  TELEPHONE  CO.  v.   TEEEY. 

127  S.   W.    (Tex.  Civ.  App.)    567.     1910. 

Speer,  J.     J.  B.  Terry,  as  plaintifE  below,  filed  this  suit  against 
the  Albany  Telephone  Company  and  the  Southwestern  Telegraph 

engaged  to  call  for  an  incoming  passenger,  went  upon  a  part  of  the  railroad 
premises  resen'ed  for  private  carriages,  although  forbidden  to  do  so,  and 
was  sued  in  trespass.  The  Court  said  in  part :  "  The  driver  is  not  en- 
gaged in  his  vocation  of  soliciting  patronage,  but  is  waiting  to  take  one 
with  whom  a  contract  has  already  been  made.  No  question  is  made  that 
a  passenger  may  have  his  own  carriage  enter  the  premises  of  the  carrier 
to  take  him  away ;  but  to  say  that  one  who  is  not  so  fortunate  as  to  own 
a  carriage  shall  not  be  allowed  to  call  the  one  he  wants,  because  it  is  a 
hackney  carriage,  would  be  a  discrimination  intolerable  in  this  country. 
.  .  .  We  think  the  justification  [of  defendant]  is  sufficient.  ...  It  simply 
secures  to  a  passenger  the  common  privileges  of  a  passenger,  and  enables 
the  hackney  driver  to  shield  himself  from  an  apparent  violation  of  the  rules 
only  when  he  i^  acting  bona  fide  as  a  servant  of  such  passenger.  This 
qualification  guards  the  owner  from  an  incursion  of  unlicensed  drivers  under 
a  mere  pretense  of  serving  passengers,  and  also  confines  the  right  of  soliciting 
business  on  his  premises  to  those  whom  he  may  permit."  Judgment  for 
defendant. 

1  The  statement  of  facts  is  abridged,  and  only  an  extract  from  the  opinion 
is  reprinted. —  Ed. 


130  THE   SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

&  Telephone  Company,  seeking  to  recover  damages  for  the  negligent 
failure  of  those  companies  in  respect  to  three  certain  telephone  calls, 
tendered  to  them  about  August  2,  1907,  relative  to  the  serious 
illness  of  his  brother,  Martin  Terry,  at  Clarksville.  The  trial  re- 
sulted in  a  verdict  and  judgment  in  plaintiff's  favor  for  $500,  and 
the  defendants  have  appealed. 

The  undisputed  facts,  which  are  decisive  of  this  appeal,  show 
that  the  first  call  involved  was  put  in  by  Mrs.  Butler,  a  sister  of 
appellee,  at  Clarksville,  about  5  o'clock  a.  m.,  August  2d,  to  the 
Southwestern  Telegraph  &  Telephone  Company,  whose  line  extends 
from  Clarksville  to  Cisco,  at  which  latter  place  the  call  was  de- 
livered to  the  Albany  Telephone  Company,  whose  line  extends  from 
Cisco  to  Stamford  and  Eotan,  The  Albany  Telephone  Company 
received  the  call  and  made  every  effort  to  find  appellee  at  Stamford, 
to  which  place  the  call  was  addressed;  but  he  was  not  to  be  found 
there,  having  departed  the  day  before  for  Eotan.  The  Southwes- 
tern Telegraph  &  Telephone  Company  had  an  arrangement  with 
the  Albany  Telephone  Company  whereby  the  two  companies  would 
handle  calls  for  Stamford,  but  not  for  Rotan.  Appellee  in  some 
way  learned  that  he  was  wanted  at  Clarksville,  and,  knowing  of  his 
brother's  illness,  attempted  to  call  up  Dr.  Dinwiddle  at  that  place 
from  Eotan  over  the  lines  of  these  appellants.  The  evidence  fur- 
ther shows  that  on  about  August  6th  one  W.  H.  Le  Master,  at 
Clarksville,  put  in  a  call  for  appellee  at  Eotan;  but  such  call  was 
refused,  for  the  reason  already  given.  Neither  of  the  appellants  of- 
fered to  handle  calls  for  the  public  between  the  stations  of  Clarks- 
ville and  Eotan.  Appellee  at  no  time  after  the  first  call  by  his 
sister,  Mrs.  Butler,  was  at  Stamford.  Under  these  facts,  the  trial 
court  should  have  given  the  requested  instructions  for  the  appellants. 
There  is  absolutely  nothing  in  the  facts  to  show  that  any  duty  was 
imposed  by  law  or  contract  on  the  appellants,  or  either  of  them,  to 
afford  the  means  of  telephonic  communication  between  appellee  at 
]iotan  and  any  of  the  other  parties  at  Clarksville. 

The  judgment  is  therefore  reversed,  and  here  rendered  for  ap- 
pellants.^ 

1  In  RillinRS  Mut.  Tel.  Co.  v.  Rocky  Mountain  Tel.  Co.  (1907),  155  Fed. 
207,  .statutory  provisions  which  allowed  one  telephone  company,  by  meana 
of  eminent  domain,  to  compel  a  connection  with,  and  a  user  of  the  lines  of 
another  telephone  company,  were  upheld  and  enforced. 


SEC.    I.]  WHAT   SERVICE    MUST   BE   RENDERED.  131 


STATE  ex  rel  THE  AMERICAN  UNIOX  TELEGRAPH  CO. 
V.  THE  BELL  TELEPHONE  CO. 

36  Ohio  State,  29G.     1880.^ 

The  Columbus  Telephone  Company  is  engaged  in  doing  a  gen- 
eral telephone  business  in  the  city  of  Columbus.  The  telephone  in- 
struments used  by  it  are  the  property  of  the  American  Bell  Tele- 
phone Company,  a  Massachusetts  corporation,  which  company  owns 
the  letters  patent  on  such  instruments.  By  the  contract  between 
the  Columbus  Telephone  Company  and  the  Bell  Telephone  Com- 
pany it  is  provided  that  no  telegraph  company,  unless  given  special 
permission  by  the  Bell  Telephone  Company,  can  be  a  subscriber  to 
the  service  of  the  Columbus  Telephone  Company,  or  use  the  sys- 
tem to  collect  and  deliver  messages  from  and  to  its  customers. 
The  Bell  Telephone  Company  has  contracted  with  the  Western 
Union  Telegraph  Company  to  give  the  latter  company  the  exclu- 
sive right  to  use  the  system  of  the  Columbus  Telephone  Company 
for  the  purpose  of  collecting  and  distributing  telegraphic  mes- 
sages. The  relators  demanded  similar  service,  but  were  refused, 
and  therefore  brought  this  action  for  a  writ  of  mandamus,  direct- 
ing the  Columbus  Telephone  Company  to  furnish  the  service  de- 
sired. 

McIlvaine,  C.  J.  "Whether  any  such  duty,  upon  the  princi- 
ples of  the  common  law,  is  owing  from  respondents  or  either  of 
them  to  the  relators  as  members  of  the  general  public,  as  is  claimed 
by  them,  growing  out  of  the  nature  of  the  business  in  which  re- 
spondents are  engaged  and  their  relations  to  the  public  generally, 
we  need  not  stop  to  inquire,  as,  in  our  opinion,  the  whole  question 
between  the  parties  may  be  determined  by  the  provisions  of  the 
statute  in  such  case  made  and  provided. 

Title  2,  chapter  4  of  the  revised  statutes  of  Ohio,  from  section 
3454  to  section  3470,  prescribes  the  powers  and  duties  of  mag- 
netic telegraph  companies,  and  section  3471  of  the  same  chapter 
provides,  "the  provisions  of  this  chapter  shall  apply  also  to  any 
company  organized  to  construct  any  line  or  lines  of  telephone, 
and  every  such  company  shall  have  the  same  powers  and  be  sub- 
ject to  the  same  restrictions  as  are  herein  prescribed  for  magnetic 
telegraph  companies." 

Among  the  powers  conferred  upon  magnetic  telegraph  com- 
panies is  the  right  to  occupy  public  roads  and  other  public  grounds, 

1  Only  a  summary  of  the  facts  is  given,  and  the  arguments  of  counsel, 
as  well  as  one  paragraph  of  the  opinion,  are  omitted. —  Ed. 


132  THE    SERVICE   TO   BE   EENDEEED.  [CHAP.    II. 

and  the  power  of  eminent  domain,  and  among  their  duties  are  the 
following,  as  prescribed  in  section  3462,  as  amended  April  15,  1880, 
namely :  "  Every  company,  incorporated  or  unincorporated,  op- 
erating a  telegraph  line  in  this  state,  shall  receive  dispatches  from 
and  for  other  telegraph  lines,  and  from  and  for  any  individual; 
and  on  payment  of  its  usual  charges  for  transmitting  dispatches, 
as  established  by  the  rules  and  regulations  of  the  company,  shall 
transmit  the  same  with  impartiality  and  good  faith,  under  a  pen- 
alty of  one  hundred  dollars  for  each  case  of  neglect  or  refusal  to 
do  so,  to  be  recovered  with  costs  of  suit  by  civil  action,  in  the  usual 
name,  and  for  the  benefit  of  the  person  or  company  sending  or 
forwarding,  or  desiring  to  send  or  forward  the  dispatch." 

This  section,  wdien  construed  in  connection  with  section  3471, 
above  quoted,  makes  it  the  duty  of  the  Columbus  Telephone  Com- 
pany to  receive  dispatches  from  and  for  telegraph  lines,  by  the 
very  words  of  the  statute;  but  if  not,  such  duty  towards  the  rela- 
tors and  each  of  them  is  embraced  in  the  succeeding  clause,  "  and 
from  or  for  any  individual."  The  word  "  individual "  is  here 
•used  in  the  sense  of  person,  and  embraces  artificial  or  corporate 
persons  as  well  as  natural.  The  dispatches  so  received  "  from  or 
for,"  must  be  transmitted  "with  impartiality,"  that  is,  without 
discrimination,  either  in  respect  to  persons  or  in  the  time  or  man- 
ner of  transmission. 

Such  being  the  nature  of  the  duty  imposed  upon  the  Columbus 
Telephone  Company  by  the  statute,  it  cannot  shield  itself  from 
the  performance  thereof,  by  any  self-imposed  restrictions  contained 
in  the  stipulations  of  a  contract  with  the  American  Bell  Telephone 
Company,  by  which  the  right  to  use  the  instruments  or  license  of 
the  latter  company  was  acquired.  The  Columbus  Telephone  Com- 
p.any  was  bound  to  acquire  from  the  American  Bell  Telephone 
Company,  such  rights  in  its  instruments  and  patent  (or  to  pro- 
vide itself  by  other  means  of  all  such  facilities),  as  were  necessary 
to  discharge  its  duties  to  the  public,  as  prescribed  in  the  statute; 
otherwise,  it  had  no  right  to  engage  in  the  business  of  operating 
a  system  of  telephones  at  all. 

We  do  not  mean  to  say,  that  as  between  the  Columbus  Telephone 
Company  and  the  American  Bell  Telephone  Company,  the  right 
to  control  the  receipt  and  delivery  of  telegraph  messages  might 
not  have  been  reserved  to  the  latter  company ;  but  we  do  hold,  that 
no  such  right  could  be  reserved  whereby  the  relators  could  be  de- 
prived of  the  use  of  the  system  of  telephones  organized  and  man- 
aged by  these  telephone  companies,  either  jointly  or  severally. 

And  in  regard  to  the  American  Bell  Telephone  Company,  it  is 
Enough  to  say,  after  what  has  already  been  said  in  relation  to  the 


SEC.    I.]  WHAT   SERVICE   MUST   BE   RENDERED.  133 

Columbus  Telephone  Company,  that  it  cannot  be  permitted  to  op- 
erate a  line  or  system  of  telephones,  in  this  state,  and  in  the  face 
of  the  statute,  either  directly,  or  through  the  agency  of  licensees, 
without  impartiality,  or  in  other  words,  with  discriminations  against 
any  member  of  the  general  public  who  is  willing  and  ready  to 
comply  with  the  conditions  imposed  upon  all  other  patrons  or  cus- 
tomers, who  are  in  like  circumstances.  And  all  contracts  in  con- 
travention of  the  public  policy  of  this  state,  as  declared  in  chapter 
4  of  the  revised  statutes,  above  referred  to,  must  be  declared  void 
and  of  no  effect. 

It  is  claimed  that  the  statute  above  referred  to  cannot  control 
or  invalidate  the  contract  in  question,  because  the  exclusive  right 
to  make,  vend,  and  use  these  telephone  instruments  is  vested  by 
the  assignment  of  letters  patent,  under  an  act  of  congress,  in  the 
American  Bell  Telephone  Company;  and  that  it  is  not  withiii 
the  power  of  a  state  to  impair  the  right  so  secured.  In  our  opin- 
ion, this  statute  is  not  the  subject  of  constitutional  infirmity. 

While  it  is  true,  that  letters  patent  secure  a  monopoly  in  the 
thing  patented,  so  that  the  right  to  make,  vend,  or  use  the  same 
is  vested  exclusively  in  the  patentee,  his  heirs  and  assigns,  for  a 
limited  period;  it  is  not  true,  that  a  right  to  make,  vend,  or  use 
the  same  in  a  manner  which  would  be  unlawful  except  for  the  let- 
ters patent,  thereby  becomes  lawful,  under  the  act  of  congress,  and 
beyond  the  power  of  the  states  to  regulate  or  control. 

This  doctrine  is  fully  discussed  and  settled  in  Jordan  v.  Over- 
seers of  Dayton  (4  Ohio,  295),  and  Patterson  v.  Kentucky  (97 
U.  S.  501).  (The  doctrine  of  these  cases  may  be  stated  thus:  the 
right  to  enjoy  a  new  and  useful  invention  may  be  secured  to  the 
inventor  and  protected  by  national  authority  against  all  interfer- 
ence; but  the  use  of  tangible  property  which  comes  into  existence 
by  the  application  of  the  discovery  is  not  beyond  the  control  of 
state  legislation,  simply  because  the  patentee  acquires  a  monopoly 
in  his  discovery.  ]  "  The  sole  operation  of  the  statute  is  to  enable 
him  to  prevent  otliers  from  using  the  products  of  his  labors  without 
his  consent;  but  his  own  right  of  using  is  not  enlarged  or  af- 
fected." The  property  of  an  inventor  in  a  patented  machine,  like 
all  other  property,  remains  subject  to  the  paramount  claims  of 
society,  and  the  manner  of  its  use  may  be  controlled  and  regulated 
by  state  laws  when  the  public  welfare  requires  it. 

It  appears  to  us,  as  a  proposition  too  plain  to  admit  of  argu- 
ment, that  where  the  beneficial  use  of  patented  property,  or  any 
species  of  property,  requires  public  patronage  and  governmental 
aid,  as,  for  instance,  the  use  of  public  ways  and  the  exercise  of 
the  right  of  eminent  domain,  the  state  may  impose  such  condi- 


134  THE    SERVICE    TO    BE   RENDERED,  [CHAP.    11. 

tions  and  regulations  as  in  the  judgment  of  the  law-making  power 
are  necessary  to  promote  the  public  good. 

As  respects  the  Western  Union  Telegraph  Company  we  are  of 
opinion  that  no  case  has  been  made  which  will  justify  a  judgment 
against  it;  but  as  to  the  respondents,  the  Columbus  Telephone 
Company  and  the  Bell  Telephone  Company,  the  writ  of  mandamus 
prayed  for  should  be  made  peremptory. 

Judgment  accordingly.^ 


NAIRIN  V.  KENTUCKY  HEATING  CO. 
27  Ky.  Law  Reporter,  551.     1900.^ 

Action  by  Eobert  Nairin  against  the  Kentucky  Heating  Com- 
pany for  an  injunction  restraining  defendant  from  turning  off 
plaintiff's  supply  of  gas.  On  an  application  for  dissolution  of 
the  injunction.     Application  granted. 

Du  Relle,  J.  It  will  be  observed  that  the  only  grounds  urged 
in  the  pleadings  in  this  case  for  relief  by  injunction  are,  stated 
briefly,  the  facts  that  the  defendant  had  natural  gas  which  it  was 
furnishing  for  heating  purposes,  and  that  plaintiff  desired  the 
gas  for  lighting  purposes ;  that  defendant  had  been  restrained  from 
furnishing  gas  for  lighting,  but  that  plaintiff  was  not  a  party  to 
the  proceeding;  and  that,  while  defendant  was  forbidden  by  the 
ordinance  under  which  it  was  permitted  to  do  business  to  sell  gas 
for  lighting  purposes,  the  city  which  passed  the  ordinance  was  not 
complaining.  It  might  be  sufficient  to  stop  here  and  say  that  here 
is  no  ground  stated  for  relief  by  injunction.  No  contract  is 
averred,  a  violation  of  which  is  sought  to  be  prevented  —  no  sug- 
gestion of  a  contract,  except  the  averment  that  plaintiff  applied 
for  a  gas  connection  and  got  it.  There  is  not  even  an  averment 
that  he  made  application  for  a  gas  connection  for  lighting  pur- 
poses. Obviously,  unless  the  defendant  be  shown  to  be  exercising 
a  public  franchise  in  the  vending  of  gas  for  lighting  purposes, 
there  is  no  more  ground  for  injunction  shown  here  than  if  he  had 
sought  one  to  restrain  Peaslee,  Gaulbert  &  Co.  from  refusing  to 
vend  oil  to  him.  But  the  petition  on  its  face  shows  that,  as  to  the 
sale  of  gas  for  lighting  purposes,  the  defendant  was  not  only  not 
exercising  a  public  franchise,  but  was,   by  the  ordinance  which 

2  See  in  accord,  Commercial  Tin.  Tel.  Co.  v.  New  Ensjland  T.  &  T.  Co. 
(1888),  01  Vt.  2A\;  Chesapeake  &  P.  Tel.  Co.  v.  Baltimore  &  O.  Tel. 
Co.  (1887),  6G  Md.  309.  But  see  contra,  American  Rapid  Tel.  Co.  v.  Con- 
necticut Tel.  Co.  (1881).  49  Conn.  852;  I*poi)le  cr  rel.  Bostnl  T.  C.  Co.  v. 
Hudson  River  Tel.  Co.   (1887),  10  Abbott's  New  Cases   (N.  Y.),  466. 

1  Only  an  extract  from  the  opinion  is  reprinted. —  Ed. 


SEC.    II.]  WHO    MUST   BE    SERVED.  135 

permitted  it  to  do  business  in  Louisville  at  all,  expressly  forbidden 
to  sell  gas  for  any  other  than  heating  purposes.  The  plaintiff 
is  therefore  in  the  position  of  asking  an  injunction  requiring  the 
defendant  to  violate  an  ordinance  of  the  city.^ 


Section  2. 


Who  Must  Be  Served  and  Excuses  for  Failure  to 

Serve. 

KISTEN  V.  HILDEBEAND. 

9  B.  Monroe,  72.     1848.^ 

Chief  Justice  Marshall  delivered  the  opinion  of  the  court. 

It  was  laid  down  in  Colyer's  case  (8  Coke,  32)  that  common  inns 
were  instituted  for  passengers  and  wayfaring  men.  And  we  think 
it  will  be  found  that  the  great  liability  imposed  upon  them,  is  for 
the  benefit  of  travellers  and  transient  persons,  who  are  often  com- 
pelled to  resort  to  inns  for  shelter  and  entertainment,  without  the 
means  of  knowing  the  character  of  the  host;  and  without  the  op- 
portunity of  securing  themselves  against  loss  or  damage  to  their 
goods.  A  common  innkeeper  is  defined  to  be  "  a  person  who 
makes  it  his  business  to  entertain  travellers  and  passengers,  and 
provide  lodging  and  necessaries  for  them  and  their  horses  and 
attendants:"  (Bacon's  Ab.  Inns  and  Innkeepers,  B.;  Story  on 
Bailments,  Sec.  475).  But  it  has  been  decided  that  a  man  may 
be  an  innkeeper,  and  liable  as  such,  though  he  have  no  provision 
for  horses.  It  is  not  necessary  that  he  should  have  a  sign  indicat- 
ing that  he  is  an  innkeeper,  but  it  must  be  his  business  to  enter- 
tain travellers  and  passengers. 

His  duty  extends  chiefly  to  the  entertaining  and  harboring  of 
travellers,  &c.,  and  therefore,  if  one  who  keeps  a  common  inn 
refuses  to  receive  a  traveller,  or  to  find  him  in  victuals,  &c., 
for  a  reasonable  price,  (without  good  excuse,  as  that  his  house 
is  full,)  he  is  liable  not  only  to  a  civil  action,  but  to  an  indict- 
ment. For  having  taken  upon  himself  a  public  employment,  he 
must  serve  the  public  to  the  extent  of  that  emplojmient:  (Bacon's 
Ab.  Inns  and  Innkeepers,  C.  1.)^ 

2  See  People  ea>  rel.  City  of  Los  Angeles  v.  Los  Angeles  Indep.  Gas  Co. 
(1907),  150  Calif.  557. 

1  Only  an  extract  from  the  opinion  is  reprinted. —  Ed. 

2  "  The  words    [of  the  writ]    are  ad   hospitandos   homines   per  partes  uhi 
hujismodi  hospitia  existunt  transcuntes,  et  in  eisdem  hospitantes ;  by  which 


236  THE    SERVICE   TO    BE   RENDERED.  [CHAP.    IIv 

BEOWN  V.  BEANDT. 

[1902]      1  K.  B.  696>  ' 

Darling  J.  I  am  of  the  same  opinion.  No  doubt  an  inn- 
keeper is  bound  to  provide  accommodation  for  travellers,  but 
he  is  not  bound  to  do  so  at  all  risks  and  all  costs.  He  is  only 
bound  to  provide  accommodation  so  long  as  his  house  is  not  full; 
when  it  is  full  he  has  no  duty  in  that  respect.  The  question 
then  arises,  when  an  innkeeper's  house  may  properly  be  said  to 
be  full.  I  do  not  think  that  the  old  cases  can  help  one  very 
much,  because  in  olden  times  people  were  in  the  habit  of  sleeping 
many  in  one  room,  and  several  in  one  bed.  People  who  were 
absolutely  unknown  to  each  other  would  sleep  in  the  same  room, 
as  is  done  in  common  lodging-houses  at  the  present  time.  There- 
fore, if  we  got  a  definition  of  "  full "  in  one  of  the  old  cases,  I 
should  not  be  surprised  to  find  that  what  was  called  "  full "  then  we' 
should  now  call  "  indecent  overcrowding."  It  is  the  habit  now  of 
people  to  occupy  separate  bedrooms,  and,  having  regard  to  the 
ordinary  way  of  living  at  the  present  time,  I  think  an  inn  may 
be  said  to  be  full  for  the  purpose  of  affording  accommodation  for 
the  night  if  all  the  bedrooms  are  occupied.  There  might  have- 
it  appears  that  common  inns  are  instituted  for  passengers  and  wayfaring 
men  ;  for  the  Latin  word  for  an  inn  is,  diversorium,  because  he  who  lodges 
there  is,  quasi  divertcns  se  a  via;  and  so  diversoriolum.  And  therefore  if 
a  neighbor  who  is  no  traveller,  as  a  friend,  at  the  request  of  the  innholder 
lodges  there  and  his  goods  be  stolen,  etc.,  he  shall  not  have  an  action  ;  for 
the  writ  is,  ad  hospitandos  homines,  etc.,  transeuntes  in  eisdem  hospitantes, 
etc."  Calye's  Case  (1584),  8  Co.  Rep.  32b.  "The  defendant  was  master 
of  the  Bell  Inn,  in  Bristol.  He  was  indicted  for  not  receiving  one  taken 
ill  with  the  smallpox ;  and  it  was  quashed  for  not  saying  he  was  a  traveller." 
King  V.  Luellin  (1703),  12  Mod.  445.  See  also  Curtis  v.  Murphy  (1885), 
63  Wis.  4. 

"  A  man  may  keep  an  inn  for  those  persons  only  who  come  in  their  own. 
carriages."  Johnson  v.  Midland  Ry.  (1849),  4  Exch.  367,  371.  "Guests 
of  a  hotel,  and  travellers  and  other  persons  entering  it  with  the  bona  fide 
intent  of  becoming  guests,  cannot  be  lawfully  prevented  from  going  in,  or 
be  put  out  by  orce,  after  entrance,  .  .  .  unless  they  be  persons  of  bad  or 
suspicious  char,  cter,  or  of  vulgar  habits,  or  so  objectionable  to  the  patrons 
of  the  house,  on  account  of  the  race  to  which  they  belong,  that  it  would 
injure  the  business  to  admit  them  to  all  portions  of  the  house."  State  v. 
Steele  (1890),  100  N.  C.  706,  782.  In  the  following  jurisdictions  refusal 
on  the  part  of  an  innkeeper  to  serve  on  account  of  race  or  color  is  for- 
bidden by  statute :  California,  Colorado,  Georgia,  Indiana,  Iowa,  Louisiana. 
Maine,  Massachusetts.  Michigan,  Minnesota,  New  York,  Ohio,  Pennsylvania, 
Vermont  and  the  United  States  possessions.  In  the  following  States  re- 
fusal to  serve  "  without  just  cause "  is  forbidden  by  statute :  Montana, 
Porto  Rico  and  Utah.  In  Delaware  and  Tennessee  innkeepers  are  by  stat- 
ute permitted  to  serve  those  whom  they  please.  See  the  statutory  provi- 
sions collected  in  the  Appendix  to  Beaie  on  Innkeepers,  and  also  Revised 
Laws  of  Louisiana,  §  456. —  K». 

See  also  Nelson  v.  Boldt   (1910),  ISO  Fed.  779. 

1  The  statement  of  facts,  arguments  of  counsel  and  the  opinion  of  LoBD 
Alvebstone,  C.  J.,  are  omitted. —  Ed. 


SEC.   II.]  WHO   MUST  BE   SERVED.  137 

been  a  difficulty  here  if  the  plaintiff  had  said,  "I  will  take  your 
sitting-room,  I  do  not  want  to  go  to  bed.  I  will  sit  up  all  night.'* 
But  that  difficulty  does  not  arise  on  the  facts  of  this  case.  The 
county  court  judge  has  found  that  the  house  was  full  having  regard 
to  modern  ways  of  living.  He  referred  to  Chaucer  and  the  Can- 
terbury pilgrims.  One  need  only  look  at  the  Sentimental  Jour- 
ney to  see  how  people's  habits  have  altered  since  the  time  of 
Laurence  Sterne.  I  am  of  opinion  that  the  county  court  judge's 
decision  was  right. 


EEX  V.  IVENS. 

7  Car.  &  P.  213.     1835. 

Supra,  p.  4.^ 


STATE  V  GOSS. 

59  Vt.  266.     1886.^ 

EowELL,  J.  This  is  a  complaint  in  one  count  for  selling,  furn- 
ishing, and  giving  away  intoxicating  liquor  contrary  to  law. 

The  facts  are  these.  In  the  summer  of  1883,  one  Pearson,  who 
lived  at  East  Barnet,  ordered  some  lager  beer  from  Bellows  Falls, 
to  be  sent  to  him  by  express,  and  it  came  in  a  box  directed  to 
him  and  marked  C.  0.  D.  The  respondent  was  station  agent, 
and  also  agent  of  the  express  company,  at  East  Barnet,  and  as 
such  express  agent  delivered  said  box  and  its  contents  to  Pearson, 
and  received  from  him  the  designated  price  of  $1.75  for  trans- 
mission to  the  consignor.  The  respondent  had  no  knowledge  of 
what  the  box  contained;  but  the  State  claimed  that  fjfom  the  form 
and  size  of  the  box,  and  the  price  paid,  he  had  reason  t6'  suspect  that 

1  See  also  Goodenow  v.  Travis  (1808),  3  Johns.  (N.  Y.)  427;  Markham 
V.  Brown  (1837),  8  N.  H.  523;  State  v.  Steele,  note  2  to  the  last  case. 

The  unconventional  dress  of  one  desiring  entertainment  is  no  justification 
for  refusal,  if  such  dress  is  not  indecent.  Regina  v.  Sprague  (1899),  63 
J.  P.    (Eng.)    233. 

One  who  insists  on  bringing  a  large  dog  with  him  into  the  inn  may  be 
refused  entertainment.     Regina  v.  Rymer   (1877),  2  Q.  B.  D.  136. 

As  to  the  right  of  an  innkeeper  to  eject  one  who  has  been  received  as  a 
guest,  on  the  ground  that  the  guest  has  become  intoxicated,  or  has  developed 
a  contagious  disease,  see  McHugh  v.  Schlosser  (1894),  1.59  Pa.  480.  As 
to  the  right  of  an  innkeeper  to  eject  a  guest  who  is  no  longer  a  traveller,  see 
Lamond  v.  Richard  [1897],  1  Q.  B.  541. 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion 
are  omitted. —  Ed. 


138  THE    SERVICE   TO   BE   RENDERED.  [CHAP.    II. 

it  contained  lager  beer,   and  that  he   could  have   found   out  by 
opening  the  box.^ 

But  do  the  circumstances  shield  the  respondent?  He  says  they 
do,  because  he  says  it  was  his  duty  to  deliver  the  packages  as  he 
did,  even  though  he  had  known  their  contents,  and  that  he  should 
have  been  liable  had  he  not  delivered  them;  while,  on  the  other 
hand,  it  is  said  that  he  was  bound  to  know  their  contents  at  his 
peril,  and  that  his  want  of  knowledge  makes  no  difference. 

Both  of  these  propositions  are  untenable.  As  to  the  first,  al- 
though express  companies  are  common  carriers,  and  liable  as  such, 
yet  the  law  neither  requires  nor  permits  them  to  do  illegal  acts; 
and  they  are  not  bound  to  transport  and  deliver  intoxicating 
liquor  nor  other  commodities  if  thereby  they  would  commit  an 
offense  or  incur  a  penalty.  They  cannot  be  allowed,  any  more 
than  other  people,  knowingly  and  with  impunity,  to  make  them- 
selves agents  for  others  to  break  the  laws  of  the  State. 

As  to  the  other  proposition,  express  carriers  are  not  bound,  as 
a  general  thing,  to  know  the  contents  of  packages  offered  to  them 
for  carriage.  If  they  were,  it  would  follow  that  they  might  re- 
fuse to  carry  without  such  knowledge;  and  as  it  would  be  un- 
reasonable to  require  them  to  accept  as  conclusive  the  word  of  the 
shipper  as  to  contents,  they  must  have  a  right  to  inspect  for  them- 
selves as  a  condition  of  carrying,  which  would  occasion  great  incon- 
venience in  practice.     But  no  such  rights  exist  as  a  general  rule. 

This  precise  question  was  passed  upon  by  the  Supreme  Court 
of  the  United  States  in  the  Nitro-Glycerine  Case,  15  Wall,  534, 
where  the  rule  is  laid  down  thus : 

"  It  not,  then,  being  his  [the  carrier's]  duty  to  know  the  con- 
tents of  any  package  offered  to  him  for  carriage,  when  there  are 
no  attendant  circumstances  awakening  his  suspicion  as  to  their 
character,  there  can  be  no  presumption  of  law  that  he  had  such 
knowledge  in  any  particular  case  of  that  kind,  and  he  cannot  ac- 
cordingly be  charged,  as  matter  of  law,  with  notice  of  the  prop- 
erties and  character  of  packages  thus  received."  ^ 

2  The  court  first  decided  that  a  servant  of  a  carrier  who  delivers  intoxi- 
cating liquors  sold  contrary  to  law  may  properly  be  indicted  for  selling,  fur- 
nishing and  giving  away  such  liquor. —  Eo. 

3  "  The  obligation  of  a  common  carrier  to  receive  and  carry  all  goods  offered, 
is  qualified  by  several  conditions,  which  he  has  a  right  to  insist  upon  before 
receiving  them.  1.  That  the  person  offering  the  goods  has  authority  to  do 
so.  .  .  .  In  an  action  brought  against  a  carrier  for  refusing  to  receive  and 
carry  goods,  would  it  not  constitute  a  valid  defense  that  the  plaintiff  had 
stolen  them,  although  at  the  time  of  offering,  the  carrier  may  not  have 
known  they  had  been  stolen?  ...  It  is  clear  that  he  would  be  justified  in 
refusing  to  receive  them  from  one  having  a  wrongful  possession,  although 
at  the  time  of  such  refusal,  he  might  not  know  the  manner  in  which  they 
had  been  obtained."     Fitch  v.  Newberry    (1843),  1  Doug.    (Mich.)    1,  10. 


SEC.    II.]  'WHO    MUST   BE   SERVED.  139 

EAST  KENTUCKY  EAILWAY  CO.  v.  HOLDBROOK. 

4  Ky.  Law  Reporter,  730.     1883. 

Appeal  from  Greenup  Circuit  Court.  Opinion  of  the  court  by 
Judge  Eichards,  affirming. 

1.  Petition  upon  attachment. —  When  an  officer,  in  whose  hands 
an  attachment  is  placed,  levies  upon  personal  property  and  places 
it  in  charge  of  a  special  bailiff,  it  is  a  good  levy,  although  his  re- 
turn upon  the  writ  only  sliows  that  he  "  levied  "  upon  the  property, 
describing  it,  without  showing  the  manner  of  taking  possession. 

2.  A  common  carrier  of  freight  has  a  lien  upon  each  shipment 
so  long  as  it  remains  in  its  possession  for  the  charges  thereon,  but 
it  cannot  refuse  to  receive  freight  because  back  charges  for  other 
shipments  have  not  been  paid;  nor  can  it  by  mere  notice  to  the 
shipper,  acquire  a  lien  upon  a  shipment  about  to  be  made,  for  such 
back  charges.^ 

MUEPHY  HARDWAEE  CO.  v.  SOUTHEEN  RAILWAY  CO. 
150  N.  C.  703.     1909.^ 

Brown,  J.  The  statute  which  imposes  the  penalty  sued  for  is 
section  2631  of  the  Eevisal  of  1905,  and  reads  as  follows:  "  Agents 
or  other  officers  of  railroads  and  other  transportation  companies 
whose  duty  it  is  to  receive  freights  shall  receive  all  articles  of  the  na- 
ture and  kind  received  by  such  company  for  transportation  whenever 
tendered  at  a  regular  depot,  station,  wharf  or  boat  landing,  and  every 
loaded  car  tendered  at  a  side  track,  or  any  warehouse  connected 
with  the  railroad  by  a  siding,  and  shall  forward  the  same  by  the 
route  selected  by  the  person  tendering  the  freight  under  existing 
laws;  and  the  transportation  company  represented  by  any  person 
refusing  to  receive  such  freight  shall  forfeit  and  pay  to  the  party 
aggrieved  the  sum  of  fifty  dollars  for  each  day  said  company  refuses 
to  receive  said  shipment  of  freight,  and  all  damages  actually  sus- 
tained by  reason  of  the  refusal  to  receive  freight.     If  such  loaded 

1  See  Atwater  v.  Del.,  L.  &  W.  R.  R.  Co.  (1886),  48  N.  J.  L.  55 
As  to  the  right  of  a  common  carrier  to  demand  prepayment,  see  Galena  & 
Chic  Un.  R.  R.  Co.  v.  Rae  (1857).  18  111.  488;  Knight  v.  Providence  & 
W.  R.  R.  Co.'  (1882),  13  R.  I.  572.  In  an  action  against  a  carrier  for 
refusal  to  carry,  the  plaintiff  need  not  plead  payment  or  a  tender  of  pay- 
ment, but  it  is  sufficient  if  he  pleads  a  readiness  and  willingness  to  pay. 
Pickford  V.  Grand  .Junction  Ry.  Co.  (1841),  8  M.  &  W.  372 ;  Clev  C.  C.  & 
St.  L.  Ry.  Co.  V.  Perishow  (1895).  61  111.  App.  179.  Slight  evidence  will 
raise  a  presumption  of  such  readiness  and  willingness.  Galena  &  Chic.  Un. 
R.  R.  Co.  V.  Rea,  supra, 

1  Part  of  the  opinion  is  omitted. —  Ed. 


140         ■  THE   SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

car  be  tendered  at  any  siding  or  warehouse  at  which  there  is  no 
agent,  notice  shall  be  given  to  an  agent  at  nearest  regular  station 
at  which  there  is  an  agent  that  such  car  is  loaded  and  ready  for 
shipment." 

In  its  answer  the  defendant  avers  that  it  was  prevented  from  fur- 
nishing cattle  cars  to  the  plaintiff  on  account  of  a  strike  of  the 
machinists  on  its  road,  numbering  some  2,000  or  3,000,  which  strike 
it  could  not  control,  in  consequence  of  which  a  large  per  cent,  of 
defendant's  motive  power  got  out  of  order  and  could  not  be  used. 

The  decision  of  the  court  is  put  upon  the  ground  that  the  action 
is  brought  to  recover  a  penalty  for  not  receiving  the  cattle,  and  not 
for  a  failure  to  transport,  and  that  therefore  the  defense  pleaded 
cannot  avail  the  defendant,  even  if  true. 

We  are  advertent  to  the  general  rule  that  the  carrier  must  at 
all  times  be  in  proper  condition  both  to  receive  from  the  shipper 
and  to  deliver  to  the  consignee.  Covington  Stock  Yard  v.  Keith, 
139  U.  S.  133.  But  we  think  that  general  rules  must  sometimes 
give  way  to  particular  cases,  and  that,  if  the  defense  set  up  be  true, 
the  defendant  could  not  be  compelled  to  receive  cattle  and  feed 
them  indefinitely  when  it  was  impossible  to  foresee  when  they  could 
be  shipped.  Otherwise,  at  a  cattle  shipping  point  like  Murphy,  the 
carrier  might,  in  cases  of  a  breakdown  or  burning  of  its  bridges,  or 
a  long-continued  strike  of  its  employes,  find  itself  in  a  short  while 
with  hundreds  of  cattle  on  hand  which  it  must  feed  and  care  for. 
JSTo  reasonable  foresight  and  judgment  can  provide  against  such 
contingencies. 

But  that  is  not  the  only  reason  why  this  defense  should  be 
allowed.  The  penalty  statutes  must  be  taken  together  so  as  to  ascer- 
tain the  entire  burden  imposed  on  the  carrier.  In  case  the  defend- 
ant had  received  these  cattle  in  its  then  unavoidably  crippled  con- 
dition, it  would  have  incurred  very  shortly  thereafter  another  pen- 
alty for  delay  in  shipping,  for  section  2632,  immediately  follow- 
ing, imposes  a  penalty  for  failure  to  transport  within  a  reasonable 
time,  and  fixes  the  limit  of  time  within  which  to  start  the  shipment 
from  the  initial  point  at  two  days.  So  it  follows  that,  if  de- 
fendant had  received  the  cattle  and  penned  them,  its  inability  to 
ship  them  within  two  days  would  have  brought  upon  it  another 
and  continuing  penalty  for  30  days.  Bagg  v.  Wilmington,  C.  & 
A.  E.  Co.,  109  N".  C.  279.  As  between  these  two  statutes,  and  in  the 
crippled  condition  it  could  not  provide  against,  the  defendant  would 
be  placed  in  a  helpless  condition.  It  seems  unreasonable  to  require 
a  carrier  to  continue  to  receive  such  a  commodity  as  live  stock, 
especially  when  conditions  it  cannot  control  or  avoid  will  prevent 
their  shipment  within  the  time  required  by  law. 


SEC.   II.]  WHO   MUST   BE   SERVED.  141 

For  these  reasons  we  think  that  a  statute  which  imposed  such 
penalties,  and  which  permitted  no  defense  and  no  excuse  however 
just,  practically  takes  the  property  of  the  carrier  without  due  pro- 
cess of  law,  because,  while  the  carrier  may  be  brought  into  court, 
it  is  denied  the  right  to  make  defense  or  excuse,  however  reason- 
able ;  but  we  do  not  so  construe  the  law. 

We  have  considered  this  question  at  length  in  the  case  of  Garri- 
son V.  Railroad,  anti,  575,  at  this  term,  in  a  well-considered  opinion 
by  Mr.  Justice  Connor,  and  have  held  that  these  penalty  statutes 
are  enacted  in  aid  of  the  common  law  and  to  compel  a  discharge  of 
those  duties  only  which  the  common  law  itself  imposes  upon  the 
carrier,  and  that,  where  the  carrier  has  a  legal  defense  or  excuse  for 
failure  to  discharge  such  duty,  it  may  be  pleaded  in  an  action  to 
recover  the  penalty. 

Upon  the  principles  laid  down  in  that  opinion,  we  think  his 
honor  erred  in  holding  that  the  statute  admitted  of  no  defense. 

In  this  view  of  the  case,  we  deem  it  unnecessary  now  to  con- 
sider the  other  question  of  interstate  commerc  presented  on  the 
record. 

New  trial.^ 


DEEBY  V.  LOWEY. 
6  Philadelphia,  30.     1865.^ 

Allison,  J.  then  charged  the  jury  as  follows : 

The  important  question  involved  in  this  action  is  the  right 
claimed  by  conductors  of  city  passenger  railways  to  refuse  passage 
to  persons  of  color,  and  to  eject  such  persons  from  the  cars  of 
which  they  have  charge,  when  entrance  to  the  same  is  obtained 
without  their  knowledge  or  consent. 

The  true  principle  is  that  a  corporation  created  for  the  carriage 
of  passengers  has  no  right  to  exclude  any  class  of  persons,  as  a 
class,  from  the  benefits  of  its  mode  of  transportation;  it  may  for 
cause  either  by  or  without  a  regulation  exclude  individuals.  A 
corporation  "of  this  description  might  as  well  undertake  to  make 

2  See  note  in  22  L.  R.  A.  (N.  S.)  1200.  Compare  Pittsburgh,  C.  &  St. 
L.  Ry.  Co.  V.  Hollowell  (1879),  65  Ind.  188;  Blackstone  v.  Railroad  Co. 
(1859),  20  N.  Y.  48.  .  ,      „,    , 

Refusal  to  serve  when  the  railroad  was  under  military  control.  Phelps  v. 
Illinois  Cent.  R.  R.  Co.  (1880),  94  Ind.  548.  Refusal  to  carry  plaintiff's 
coal  on  the  ground  that  it  was  of  inferior  quality,  and  so  would  injure  the 
reputation  of  coal  carried  by  defendant,  and  injure  defendant's  coal  carrying 
business.  Olanta  Coal  M.  Co.  v.  Beech  Creek  R.  R.  Co.  (1906),  144  Fed. 
1.50.  Refusal  to  carry  unless  plaintiff  would  enter  into  contract  limiting 
defendant's  liability.  McMillan  v.  Michigan  S.  &  N.  I.  R.  R.  Co.  (1867), 
16  Mich.  79. 

1  The  statement  of  facts  and  part  of  the  opinion  are  omitted. —  Ed. 


142  THE    SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

nationality  or  religion  a  ground  of  exclusion,  as  color;  it  would 
not  be  difficult  to  determine  in  advance  the  legal  force  of  a  by- 
law excluding  all  Germans,  or  Frenchmen,  or  Irishmen,  or  Protest- 
ants or  Catholics,  Jews  or  Greeks,  as  such,  from  the  passenger 
cars  of  the  city;  such  an  exclusion  would  not  be  tolerated  by  any 
intelligent  tribunal;  and  yet  in  this,  the  day  of  our  comparative 
enlightenment  and  freedom  from  a  prejudice,  to  which  we  were 
so  long  in  bondage,  a  question  can  be  seriously  made  before  a 
court  and  jury  and  practically  enforced  at  the  bar  of  public  opinion, 
as  to  the  right  of  an  individual  conductor,  or  a  company,  to  turn 
persons  out  of  the  passenger  cars  of  the  city  with  force  and  vio- 
lence because  of  their  complexion.  Than  this,  nothing  can  be 
more  unreasonable ;  nothing,  in  my  opinion,  is  a  clearer  or  grosser 
violation  of  the  plainest  principles  of  the  law  and  of  the  rights 
of  individuals. 

But,  it  is  asked,  are  these  corporations  powerless  to  protect  them- 
selves or  the  passengers  whom  they  carry?  By  no  means,  they 
have  a  perfect  right  to  exclude  any  one  not  a  fit  person  to  ride  in 
their  cars.  Intoxication,  profane  or  indecent  language;  the  pres- 
ence of  one  afflicted  with  an  offensive  or  contagious  disease,  smok- 
ing in  the  cars,  are  but  illustrations  of  the  principle,  because  these 
are  a  reasonable  offence  to  the  travelling  public ;  these  of  themselves 
constitute  a  ground  for  exclusion  or  removal ;  but  the  mere  preju- 
dice of  one  class  against  another  cannot  be  allowed  to  subvert  or 
overthrow  the  cardinal  doctrine  of  the  equality  of  all  before  the 
law,  in  the  maintenance  of  the  sacred  rights  of  person  and  of 
citizenship. 

The  argument  which  is  used  as  a  justification  for  the  exclusion 
of  people  of  color  from  the  cars,  would  shut  them  out  from  and 
bar  against  them  our  courts  of  justice,  forbid  to  them  the  use 
of  public  ferries,  bridges  and  highways,  and  rests  not  upon  any 
principle  of  legal  or  moral  right,  but  upon  bald,  naked  prejudice 
alone.  It  is  our  duty,  gentlemen,  in  the  discharge  of  our  duties, 
you  in  your  sphere  and  I  in  mine,  to  cast  aside  all  prejudice,  that 
the  law  may  vindicate  its  just  claim  to  strict  and  impartial  justice. 
And  if,  by  the  action  of  courts  and  juries,  wrong  has  been  done 
to  the  class  of  citizens  to  which  the  plaintiff  belongs,  it  is  time 
that  such  errors  should  be  corrected. 

That  the  jury,  for  a  wrong  like  that  complained  of  by  the  plain- 
tiff, may  go  beyond  mere  compensatory  damages,  and  may  give 
vindictive  damages,  by  way  of  punishment.  Verdict  for  plaintiff. 
Fifty  dollars  damages. 


SEC.    II.]  WHO    MUST   BE    SERVED.  14:3 

FORD  V.  EAST  LOUISIANA  RAILROAD  CO. 

110  La.  414.     1903.^ 

Plaixtiff  was  a  porter  on  a  railroad  which  had  through  excursion 
arrangements  with  defendant,  and  plaintiff  was  for  several  years 
allowed  to  ride  free  over  defendant's  line  from  the  point  of  con- 
nection of  the  two  roads  to  Covington,  where  plaintiff  lived.  On 
one  occasion  plaintiff  was  ordered  off  of  one  of  defendant's  trains 
by  defendant's  superintendent,  on  the  ground  that  plaintiff  had 
been  engaged  from  time  to  time  in  buying  and  selling  unused  parts 
of  excursion  tickets  over  defendant's  road.  Plaintiff  offered  to 
pay  his  fare  but  tliis  offer  was  refused. 

Blaxchaed,  J.  Here  he  was  neither  asked  for  a  ticket,  nor 
for  payment  of  the  fare  in  money. 

Even  if  shown  that  he  had  been  trafficking  in  the  unused  por- 
tions of  excursion  tickets,  the  company  could  not,  because  of  that, 
have  denied  him  the  right  to  travel  as  a  passenger  on  its  trains, 
provided  he  paid  the  fare. 

It  could,  of  course,  at  its  pleasure,  have  withdrawn,  with  or 
without  cause  shown,  the  permission  given  him  to  ride  free,  and 
it  could  have  resorted  to  any  of  the  means  provided  by  the  law  to 
prevent  the  practice  of  buying  and  selling  tickets  and  protect  its 
rights  from  that  kind  of  invasion. 

But  a  man  who  "  scalps "  railroad  tickets  cannot,  generally, 
be  denied  transportation  over  the  lines  of  the  railways  in  whose 
tickets  he  traffics.  He  is  a  part  of  the  general  public  and  rail- 
way companies,  as  common  carriers,  must  permit  all  who  pay 
the  regular  fare  to  travel  on  their  trains. 

Here  the  man  was  sick ;  he  offered  to  pay  his  fare ;  it  was  de- 
nied him.  He  was  angrily  ordered  off  the  train ;  the  train  was 
stopped  in  order  to  put  him  off;  the  manager  directed  the  con- 
ductor to  put  him  off. 

This  was  the  equivalent  of  force,  even  if  actual  force  was  not 
■used,  though  as  to  that  the  testimony  is  conflicting,  plaintiff  claim- 
ing the  conductor  took  him  b}'^  the  arm,  led  him  to  the  steps  of 
the  platform  and  demanded  of  him  to  get  off.  The  conductor 
denies  that  he  put  his  hands  on  him,  though  he  admits  standing 
on  the  steps  when  Ford  got  off,  and  he  followed  him  off,  getting 
back  on  the  car,  himself,  at  the  rear  end  as  it  passed  on  again. 
There  is  no  denial  by  either  the  conductor  or  the  manager  that 
Ford  was  ordered  off  the  car. 

1  Onlv  a  summary  of  the  facts  is  given,  and  part  of  the  opinion  is  omitted. 
—  Ed. 


144  THE   SERVICE  TO  BE   RENDERED.  [CHAP.   IL 


THURSTON  V.  UNION  PACIFIC  RAILEOAD  CO. 

Fed.  Cas.  No.  14019.     1877. 

Dundy,  District  Judge.  The  railway  company  is  bound,  as  a 
common  carrier,  when  not  over-crowded,  to  take  all  proper  persons 
who  may  apply  for  transportation  over  its  line,  on  their  comply- 
ing with  all  reasonable  rules  of  the  company.  But  it  is  not  bound 
to  carry  all  persons  at  all  times,  or  it  might  be  utterly  unable  to 
protect  itself  from  ruin.  It  would  not  be  obliged  to  carry  one 
whose  ostensible  business  might  be  to  injure  the  line;  one  fleeing 
from  justice;  one  going  upon  the  train  to  assault  a  passenger, 
commit  larceny  or  robbery,  or  for  interfering  with  the  proper 
regulations  of  the  company,  or  for  gambling  in  any  form,  or 
committing  any  crime;  nor  is  it  bound  to  carry  persons  infected 
with  contagious  diseases,  to  the  danger  of  other  passengers.  The 
person  must  be  upon  lawful  and  legitimate  business.  Hence  de- 
fendant is  not  bound  to  carry  persons  who  travel  for  the  purpose 
of  gambling.  As  gambling  is  a  crime  under  the  state  laws,  it  is 
not  even  necessary  for  the  company  to  have  a  rule  against  it.  It 
is  not  bound  to  furnish  facilities  for  carrying  out  an  unlawful 
purpose.  Necessary  force  may  be  used  to  prevent  gamblers  from 
entering  trains,  and  if  found  on  them  engaged  in  gambling,  and 
refusing  to  desist,  they  may  be  forcibly  expelled. 

Whether  the  plaintiff  was  going  upon  the  train  for  gambling 
purposes,  or  whether,  from  his  previous  course,  the  defendant 
might  reasonably  infer  that  such  was  his  purpose,  is  a  question  of 
fact  for  the  jury.  If  they  find  such  to  have  been  the  case,  they 
cannot  give  judgment  for  any  more  than  the  actual  damage  sus- 
tained. 

After  the  ticket  is  purchased  and  paid  for,  the  railroad  com- 
pany can  only  avoid  compliance  with  its  part  of  the  contract,  by 
the  existence  of  some  legal  cause  or  condition  which  will  excuse 
it.  The  company  should,  in  the  first  case,  refuse  to  sell  tickets 
to  persons  whom  it  desires  and  has  the  right  to  exclude  from  the 
cars,  and  should  exclude  them  if  they  attempt  to  enter  the  car 
without  tickets.  If  the  ticket  has  been  inadvertently  sold  to  such 
person  and  the  company  desires  to  rescind  the  contract  for  trans- 
portation, it  should  tender  the  return  of  the  money  paid  for  the 
ticket.  If  it  does  not  do  this,  plaintiff  may,  under  any  circum- 
stances, recover  the  amount  of  his  actual  damage,  viz. :  what  he 
paid  for  the  ticket,  and,  perhaps,  necessary  expenses  of  liis  de- 
tention. 


SEC.    II.]  "^HO    MUST   BE    SERVED.  145 

In  this  case  the  jury  rendered  a  verdict  for  actual  damages 
($1.74)  and  costs,  the  company  not  having  tendered  the  money. 
Judgment  on  verdict.^ 

EEASOR  V.  PADUCAH  &  ILLIXOIS  FEERY  CO. 
152  Ky.  220.     1913.^ 

Lassing,  J.  A  steamboat  company,  holding  itself  out  to  the 
public  as  a  carrier  of  passengers  and  freight,  is  a  common  carrier, 
within  the  meaning  of  the  statute;  and  the  duties  imposed  upon 
common  carriers  by  the  laws  of  the  land  are  applicable  to  it.  The 
fact  that  it  is  running  a  special  excursion  does  not  have  the  effect 
of  relieving  its  owners  of  the  duty  imposed  upon  it  as  a  common 
carrier.  6  Cyc.  535;  Indianapolis,  etc.,  E.  Co.  v.  Einard,  46 
Ind.  293.  One  of  the  duties  owing  by  a  common  carrier  to  the 
public  is  to  carry,  without  discrimination,  as  far  as  practicable,  all 
persons  who  apply  for  passage  and  tender  in  payment  therefor  the 
established  fares,  or  provide  themselves  with  tickets  entitling  them 
to  passage.  But  this  duty  to  serve  the  public  does  not  deprive  the 
carrier  of  the  right  to  make  reasonable  and  proper  rules  for  the 
conduct  of  its  business,  among  which  may  be  enumerated  the  right 
to  deny  passage  to  or  to  exclude  from  its  conveyance  one  already 
a  passenger,  if  such  person  is  in  such  an  intoxicated  condition  as  to 
be  unable  to  care  for  himself,  or  as  to  make  it  probable  that  he 
will  annoy  or  disturb  the  other  passengers;  or  it  may  refuse  pas- 
sage to  or  exclude  from  its  vehicle  a  person  of  notoriously  bad 
character,  or  one  habitually  guilty  of  misconduct,  when  it  is  ap- 
parent that  the  safety  and  comfort  of  the  other  passengers  will  be 
endangered  by  the  presence  of  such  person  in  the  conveyance. 
The  fact  that,  on  a  former  occasion,  a  passenger  had  been  guilty 
of  misconduct,  drunk,  boisterous,  and  indecent  in  his  behavior  to- 
ward other  passengers,  will  not  justify  the  carrier  in  refusing 
to  permit  him  to  again  travel  upon  its  conveyance,  if,  when  he 
presents  himself  for  passage,  he  is  sober,  and  is  conducting  himself 
in  a  decent  and  orderly  manner. 
'  There  is  nothing  in  the  record  to  show  that  appellant,  on  the 
occasion  in  question,  was  drunk,  or  drinking,  or  disorderly;  on 
the  contrary,  the  evidence  distinctly  negatives  such  an  idea.  The 
refusal  of  appellee  to  carry  him  as  a  passenger  on  its  boat  was 
based  solely  on  the  fact  that  he  had  not  conducted  himself  in  a 
gentlemanly  manner  on  a  former  occasion.     As  stated,_this  fur- 

1  See  Turner  v.  North  Car.  R.  R.  Co.   (1869),  63  N.  C.  522. 

1  The  statement  of  facts  and  part  of  the  opinion  are  omitted. —  Ed. 


146  THE    SERVICE    TO   BE   RENDERED.  [CHAP.    II. 

nished  appellee  no  excuse  for  refusing  him  passage;  and  the  trial 
court  properly  held  this  plea  bad  on  demurrer.^ 


BOGAED'S  ADM'E.  v.  ILLINOIS  CENTEAL  EAILEO AD  CO. 

144  Ky.  &49.     1911> 

Settle,  J.  A  common  carrier,  independently  of  the  contractual 
relation,  is  under  a  general  obligation  to  receive  and  carry  upon  its 
trains  all  proper  persons  who  apply  for  transportation  and  offer  to 
pay  the  regular  fare  for  such  service.  By  the  term  "  proper  per- 
sons" is  meant  persons  whose  status  or  condition  apparently  en- 
titles them  to  be  carried  as  passengers.  On  the  other  hand,  the 
carrier  has  the  right  to  refuse  to  receive  or  carry  as  passengers, 
improper  persons;  that  is,  persons  whose  condition  or  conduct  is 
such,  from  intoxication,  disorderly  conduct,  contagious  diseases, 
or  other  things,  as  to  make  their  presence  on  the  train  dangerous 
to  the  lives  or  health  of  other  passengers.  Likewise,  if  the  condi- 
tion or  conduct  of  a  person,  after  being  received  as  a  passenger, 
becomes  such  as  to  endanger  the  lives  or  health  of  other  passen- 
gers, or  to  unreasonably  annoy  or  offend  them,  it  is  the  right  and 
duty  of  the  carrier's  servants  in  charge  of  the  train,  upon  receiv- 
ing notice  thereof,  to  eject  such  offending  person  from  the  train; 
but  in  doing  so  they  must  also  exercise  due  care  to  protect  his 
health  and  person  from  danger  or  unnecessary  discomfort. 

In  such  a  case  the  carrier  is  bound  to  exercise  a  reasonable  dis- 
cretion, according  to  conditions  as  they  reasonably  appear  at  the 
time.     Thompson  on  Negligence,  vol.  3,  §  3225.^ 


PEICE  V.  ST.  LOUIS,  lEON  MOUNTAIN  AND  SOUTHEEN 

EAILWAY  CO. 

75  Ark.  479.     1905.^ 

Wood,  J.  A  railway  company  is  not  required  to  accept  as  a 
passenger  one  without  an  attendant,  who,  from  intoxication,  is 
mentally  or  physically  incapable  of  taking  care  of  himself.     But 

2  As  to  degree  of  intoxication  which  will  justify  refusal,  see  Pittsburgh, 
C.  &  St.  L.  Ry.  Co.  V.  Vandyne  (1877),  57  Ind.  57G. 

1  Only  an  extract  from  the  opinion  is  reprinted. —  Ed. 

2  As  to  the  oxorcisp  of  the  right  to  eject  a  person  who  has  been  received 
as  a  passenfier,  but  is  afterwards  found  to  be  ill  or  intoxicated,  see  Loui.s- 
ville  &  N.  11.  R.  Co.  v.  Logan  (1889),  88  Ky.  232;  Korn  v.  Railway  Co. 
(1903),  125  Fed.  897. 

1  Only  an  extract  from  the  opinion  is  reprinted. —  Ed. 


SEC.    II.]  WHO    MUST   BE   SERVED.  147 

it  cannot  refuse  to  receive  as  a  passenger  one  who  is  capable  of 
taking  care  of  himself,  and  whose  presence  is  not  dangerous  or 
hurtful  or  annoying  to  fellow  passengers. 

If  the  conductor  of  a  passenger  train  accepts  one  as  a  passenger, 
unattended,  who,  from  drunkenness,  is  unable  to  look  after  himself, 
he  (the  conductor),  in  so  doing,  is  acting  within  the  scope  of  his 
authority.  It  is  one  of  the  duties  of  the  conductor  to  pass  upon 
the  eligibility,  so  to  speak,  of  those  presenting  themselves  for 
transportation. 

If  a  conductor  accepts  a  person  as  a  passenger  whom  he  knows 
to  be  unattended,  and  knows  to  be  insensible  from  intoxication,  and 
thereby  unable  to  protect  himself  from  danger  and  injury,  the 
company  owes  him  the  duty  to  exercise  such  care  as  may  be  rea- 
sonably necessary  for  his  safety.  While  the  company  is  not  an 
insurer  of  the  person  of  one  who  has  been  received  as  a  passenger 
in  such  condition,  being  cognizant  thereof,  it  is  bound  to  exercise 
all  the  care  that  a  reasonably  prudent  man  would  to  protect  one 
in  such  insensible  and  helpless  condition  from  the  dangers  incident 
to  his  surroundings  and  mode  of  travel. 

The  railroad  company  must  bestow  upon  one  in  such  condition 
any  special  care  and  attention,  beyond  that  given  to  the  ordinary 
passenger,  which  reasonable  prudence  and  foresight  demand  for 
his  safety,  considering  any  manner  of  conduct  or  disposition  of 
mind  manifested  by  the  passenger  and  known  to  the  company,  or 
any  conduct  or  disposition  that  might  have  been  reasonably  antici- 
pated from  one  in  his  mental  and  physical  condition,  which  would 
tend  to  increase  the  danger  to  be  apprehended  and  avoided.  If  its 
servants,  knowing  the  facts,  fail  to  give  such  care  and  attention, 
and  injury  results,  as  the  natural  and  probable  consequence  of  I 
such  failure,  the  company  will  be  guilty  of  negligence,  and  liable 
in  damages  for  such  injury.^ 


PEAESON  V.  DUANE. 
4  Wallace,  605.     1866.^ 

In  the  month  of  June,  1856,  the  steamship  Stevens,  a  common 
carrier  of  passengers,  of  which  Pearson  was  master,  on  her  regular 

2  As  to  the  right  to  refuse  to  carry  a  blind  person,  see  Illinois  Cent.  R.  R. 
Co.  V.  Smith   (lOOl),  &5  Miss.  349. 

As  to  the  right  to  refuse  to  carry  a  person  who  is  ill.  but  who  has  not  an 
infectious  disease,  see  Connors  v.  Cunard  S.  S.  Co.   (1910),  204  Mass.  310. 

As  to  the  right  to  exclude  insane  persons,  see  Pullman  Car  Co.  v.  Krauss 
(1906),  145  Ala.  395;  Owens  v.  Macon  &  B.  R.  Co.   (1903),  119  Ga.  230. 

1  Part  of  the  statement  of  facts,  the  arguments  of  counsel,  and  part  of 
the  opinion  are  omitted. —  Ed. 


148  THE    SERVICE    TO   BE   RENDERED.  [CHAP.    II. 

trip  from  Panama  to  San  Francisco,  arrived  at  the  intermediate 
port  of  Acapulco,  where  Duane  got  on  board,  with  the  intention 
of  proceeding  to  San  Francisco.  He  had,  shortly  before  this,  been 
banished  from  that  city  by  a  revolutionary,  yet  powerful  and  or- 
ganized body  of  men,  called  "  The  Vigilance  Committee  of  San 
Francisco,"  upon  penalty  of  death  in  case  of  return.  This  com- 
mittee had,  in  the  fore  part  of  June,  against  his  will,  placed  him  on 
the  Golden  Age,  a  steamer  in  the  harbor  of  San  Francisco,  des- 
tined for  Panama,  with  directions  that  he  should  be  conveyed 
beyond  the  limits  of  California ;  and  he  was  forcibly  carried  to  the 
Mexican  port  of  Acapulco.  The  presence  of  the  Stevens  afforded 
the  first  opportunity  to  get  back,  which  he  was  anxious  to  embrace, 
being  willing  to  encounter  the  risk  to  which  his  return  might  ex- 
pose him.  Duane  went  openly  on  the  boat,  at  the  public  gangway, 
and  talked  freely  with  some  of  the  officers  and  passengers.  It 
is  not  certain  that  the  master  knew  of  his  being  aboard  until  after 
the  ship  got  to  sea,  but  no  directions  had  been  given  for  his  expul- 
sion, and  though  he  was  without  a  ticket,  or  money  to  buy  one, 
yet  a  passenger,  who  had  the  means,  offered  to  pay  the  purser  his 
fare,  who  declined  receiving  it. 

It  was  usual  for  those  persons  who  wished  to  secure  a  passage, 
to  procure  a  ticket  at  Acapulco,  but  there  was  no  imperative  rule 
of  the  ship  requiring  it,  and  the  customary  fare  was  often  paid 
to  the  purser  after  the  boat  had  left  the  port. 

There  was  no  evidence  that  Duane  would  have  been  excluded, 
liad  the  master  been  aware  that  he  was  on  board  before  he  left 
Acapulco,  for  it  was  quite  clear  that  the  circumstances  of  his  ban- 
ishment were  unknown  at  that  time. 

The  master,  Pearson,  was  aware  that  the  Vigilance  Committee 
was  in  control  of  San  Francisco,  and  ascertained  in  some  way  that 
Duane  had  been  expelled  by  them  from  California,  and  if  he  re- 
turned, would  be  in  danger  of  losing  his  life.  Having  learned 
this,  he  resolved  to  put  Duane  aboard  the  first  down  ship  he  met, 
and  send  him  back  to  Acapulco.  The  steamer  Sonora,  commanded 
by  Captain  Whiting,  and  one  of  the  same  line  of  steamers  of  which 
Pearson,  was  master,  very  soon  came  in  sight,  and  was  stopped. 
Whiting  informed  Pearson  that  he  had  orders  not  to  carry  back 
any  banished  person,  and  that  Duane  would  certainly  he  executed 
if  he  returned,  and  advised  that  he  should  be  sent  to  the  Sonora,  and 
he  would  endeavor  to  persuade  him  to  go  on  with  him. 

Thereupon  Duane  was  transferred  to  the  Sonora,  and  landed  at 
Acapulco.  The  transfer  was  effected  without  any  personal  indig- 
nity to  Duane,  who  at  first  resisted,  but  was  induced  to  yield  to 
superior  force,  by  friendly  counsels. 


SEC.    II.]  WHO    MUST   BE    SERVED.  149 

Mr.  Justice  Davis  delivered  the  opinion  of  the  court. 

This  case  is  interesting,  because  of  certain  novel  views  which 
this  court  is  asked  to  sustain. 

Two  questions  arise  in  it:  1st,  w^as  the  conduct  of  Pearson 
justifiable?  2d,  if  not,  what  should  be  the  proper  measure  of 
damages?  It  is  contended,  as  the  life  of  Duane  was  in  immi- 
nent peril,  in  case  of  his  return  to  San  Francisco,  that  Pearson 
was  justified,  in  order  to  save  it,  in  excluding  him  from  his  boat, 
notwithstanding  Duane  was  willing  to  take  his  chances  of  being 
hanged  by  the  Vigilance  Committee. 

Such  a  motive  is  certainly  commendable  for  its  humanity,  and 
goes  very  far  to  excuse  the  transaction,  but  does  not  justify  it. 
Common  carriers  of  passengers,  like  the  steamship  Stevens,  are 
obliged  to  carry  all  persons  who  apply  for  passage,  if  the  accom- 
modations are  sufficient,  unless  there  is  a  proper  excuse  for  re- 
fusal.^ 

If  there  are  reasonable  objections  to  a  proposed  passenger,  the 
carrier  is  not  required  to  take  him.  In  this  case,  Duane  could 
have  been  well  refused  a  passage  when  he  first  came  on  board  the 
boat,  if  the  circumstances  of  his  banishment  would,  in  the  opinion 
of  the  master,  have  tended  to  promote  further  difficulty,  should  he 
be  returned  to  a  city  where  lawless  violence  was  supreme. 

But  this  refusal  should  have  preceded  the  sailing  of  the  ship. 
After  the  ship  had  got  to  sea,  it  was  too  late  to  take  exceptions 
to  the  character  of  a  passenger,  or  to  his  peculiar  position,  pro- 
vided he  violated  no  inflexible  rule  of  the  boat  in  getting  on  board. 
This  was  not  done,  and  the  defence  that  Duane  was  a  "  stowaway," 
and  therefore  subject  to  expulsion  at  any  time,  is  a  mere  pre- 
tence, for  the  evidence  is  clear  that  he  made  no  attempt  to  secrete 
himself  until  advised  of  his  intended  transfer  to  the  Sonora. 
Although  a  railroad  or  steamboat  company  can  properly  refuse 
to  transport  a  drunken  or  insane  man,  or  one  whose  character 
is  bad,  they  cannot  expel  him,  after  having  admitted  him  as  a 
passenger,  and  received  his  fare,  unless  he  misbehaves  during  the 
journey.^  Duane  conducted  himself  properly  on  the  boat  until 
his  expulsion  was  determined,  and  when  his  fare  was  tendered  to 
the  purser,  he  was  entitled  to  the  same  rights  as  other  passengers. 
The  refusal  to  carry  him  was  contrary  to  law,  although  the  reason 
for  it  was  a  humane  one.  The  apprehended  danger  mitigates 
the  act,  but  affords  no  legal  justification  for  it. 

But,  the  sum  of  four  thousand  dollars  awarded  as  damages,  in 

2  .Tencks  v.  Coleman,  2  Sumner,  221 ;  Bennett  v.  Button.  10  New  Hamp- 
shire, 486. 

3  Coppin   i'.   Braitliwaite,  8  Jurist,  875 ;   Prendergast  v.  Compton,  8  Car- 
rington  and  Payne,  402. 


150  THE    SERVICE    TO   BE    RENDERED.  [CHAP.    II. 

this  case,  is  excessive,  bearing  no  proportion  to  the  injury  re- 
ceived. Duane  is  entitled  to  compensation  for  the  injury  done 
him  by  being  put  on  board  the  Sonora,  so  far  as  that  injury  arose 
from  the  act  of  Pearson  in  putting  him  there.  But  the  outrages 
which  he  suffered  at  the  hands  of  the  Vigilance  Committee,  his 
forcible  abduction  from  California  and  transportation  to  Acapulco, 
the  difficulties  experienced  in  getting  to  New  York,  and  his  in- 
ability to  procure  a  passage  from  either  Acapulco  or  Panama  to 
San  Francisco,  cannot  be  compensated  in  this  action.  The  ob- 
structions he  met  with  in  returning  to  California  were  wholly  due 
to  the  circumstances  surrounding  him,  and  were  not  caused  by 
Pearson,  Every  one,  doubtless,  to  whom  he  applied  for  passage, 
knew  the  power  of  the  Vigilance  Committee,  and  were  afraid  to 
encounter  it,  by  returning  an  exile,  against  whom  the  sentence 
of  death  had  been  pronounced. 

Pearson  had  no  malice  or  ill-will  towards  Duane;  and,  as  the 
evidence  clearly  shows,  excluded  him  from  his  boat,  in  the  fear 
that,  if  returned  to  San  Francisco,  he  would  be  put  to  death.  It 
was  sheer  madness  for  Duane  to  seek  to  go  back  there.  Common 
prudence  required  that  he  should  wait  until  the  violence  of  the 
storm  blew  over,  and  law  and  order  were  restored. 


MATTEE  OF  CULLEN  v.   NEW  YORK  TELEPHONE  CO. 

106  N.  Y.  App.  Div.  250.     1905. 

Appeal  from  Special  Term,  Kings  County. 

Application  by  James  E.  Cullen  for  a  writ  of  peremptory  man- 
damus against  the  New  York  Telephone  Company  to  compel  it  to 
render  telephone  service  to  him.  From  an  order  denying  the  ap- 
plication, the  applicant  appeals.     Affirmed. 

WiLLARD  Bartlett,  J.  We  are  not  prepared  to  say  that  the 
discretion  of  the  learned  judge  at  Special  Term  was  improperly 
exercised  in  this  case  in  denying  the  appellant's  application  for  a 
peremptory  writ  of  mandamus  commanding  the  respondent  to  in- 
stall a  telephone  instrument  in  the  cigar  shop  of  the  appellant, 
and  to  render  him  the  customary  telephone  service  in  connection 
therewith.  The  writ  of  mandamus  will  not  issue  in  cases  of  doubt- 
ful right.  People  ex  rel.  Nicholl  v.  N.  Y,  Infant  Asylum,  122 
N.  Y.  190.  Indeed,  it  may  often  properly  be  refused,  in  the  exer- 
cise of  judicial  discretion,  even  where  the  applicant  has  a  cause  of 
action  enforceable  in  a  suit  for  damages.  The  papers  presented  to 
the  court  at  Special  Term  in  this  case  set  out  facts  and  circum- 


SEC.    II.]  WHO    MUST   BE    SERVED.  151 

stances  warranting  a  suspicion  on  the  part  of  the  police  authorities 
that  the  premises  of  which  tlie  appellant's  cigar  shop  form  a  part 
were  used  for  pool-selling  purposes  prior  to  the  beginning  of  his 
tenancy,  and  also  indicating  his  presence  in  and  about  the  place  so 
frequently  as  to  justify  the  inference  that  he  may  well  have  been 
cognizant  of  the  fact  that  the  law  had  thus  been  violated  there. 
On  one  occasion  during  the  period  when  he  was  a  frequent  visitor, 
several  persons  were  arrested  by  the  police  there  upon  the  charge 
that  they  were  engaged  in  the  business  of  selling  pools  on  horse 
races,  in  violation  of  section  351  of  the  Penal  Code.  A  telephone 
instrument  which  had  been  installed  by  the  respondent  for  the 
service  of  an  express  company  had  been  removed  by  the  police,  and 
the  restoration  of  the  service  refused  without  the  institution  of  any 
legal  proceedings  to  compel  its  restoration.  In  behalf  of  the  appel- 
lant it  is  insisted  that  he  is  not  chargeable  with  knowledge  of  these 
transactions  antedating  his  tenancy ;  but,  as  I  have  intimated,  his 
frequent  visits,  which  are  stated  to  have  numbered  more  than  three 
or  four  a  week  between  the  1st  day  of  March,  1904,  and  the  12th 
day  of  February,  1905,  render  it  somewhat  improbable  that  he  did 
not  know  what  was  going  on.  However  this  may  be,  it  is  to  be 
noted  that,  according  to  the  appellant's  own  affidavit,  the  refusal  of 
the  respondent  to  furnish  him  with  a  telephone  instrument  and 
service  was  not  absolute  in  character.  His  application  was  made  to 
Mr.  W.  F.  Baker,  the  contracting  agent  of  the  respondent,  who,  at 
the  close  of  the  interview,  told  the  appellant's  counsel  that  if  Mr. 
Cullen  would  write  a  letter  to  the  telephone  company  stating  that 
he  would  not,  and  did  not  intend  to,  use  the  telephone  for  illegal 
purposes,  and  would  give  the  company  a  reference,  "  he  would  take 
up  the  matter  with  the  general  manager  of  the  company." 

Under  the  circumstances,  this  does  not  seem  to  us  to  have  been 
an  unreasonable  requirement.  The  New  York  Telephone  Company 
had  been  informed  by  the  police  department  that  the  premises  had 
been  used  as  a  poolroom.  It  was  also  aware  that  a  telephone  which 
it  had  previously  installed  therein  had  been  removed  therefrom  by 
the  police.  The  officers  of  the  company  might  not  unreasonably 
apprehend  that  they  would  render  themselves  liable  for  aiding  and 
abetting  a  violation  of  the  law  if  they  furnished  further  telephone 
service  to  the  premises  in  view  of  this  information.  It  was  quite 
proper,  therefore,  for  them  to  request  the  assurance  from  the  ap- 
pellant which  the  contracting  agent  suggested,  and  for  them  also 
to  require  the  appellant  to  furnish  a  reference  as  to  his  character. 
The  action  of  the  corporation  in  refusing  to  comply  with  the  ap- 
pellant's demand  until  the  assurance  and  reference  thus  requested 
should  be  supplied  was  not  a  final  refusal.     The  statement  of  the 


152  THE    SERVICE    TO    BE   RENDERED.  [CHAP.    II. 

contracting  agent  that  he  would  thereupon  take  np  the  matter 
with  the  general  manager  of  the  company  was  a  promise  to  act 
upon  the  application  thereafter  with  an  open  mind  and  a  fair  con- 
sideration of  the  whole  case,  such  as  might  lead  the  company  to 
jjrut  in  the  desired  instrument  and  serve  the  appellant  as  a  tele- 
phone subscriber.  This  attitude  on  the  part  of  the  defendant  cor- 
poration, if  nothing  else,  justified  the  court  at  Special  Term  in 
denying  the  appellant's  application  for  the  discretionary  and  pre- 
rogative writ  of  mandamus. 

The  order  appealed  from  should  be  affirmed.^ 

Order  affirmed,  with  $10  costs  and  disbursements.     All  concur. 


WIEMER  V.  LOUISVILLE  WATER  CO. 

130  Fed.  251.     1903.^ 

Evans,  District  Judge.  Although  the  court  has  given  this 
case  very  attentive  consideration,  it  is  too  much  pressed  for  time 
just  now  to  do  more  than  state  its  conclusions  generally  without 
going  into  details.  By  his  bill  and  the  pending  motion  the  com- 
plainant, Wiemer,  seeks  an  injunction,  mandatory  in  character,  to 
compel  the  defendant  to  supply  him  with  water;  he  offering  full 
security  for  the  payment  of  the  price  thereof.  The  learned  counsel 
for  the  defendant  do  not  contest  the  general  proposition  that  the 
defendant  is  a  corporation  which  owes  certain  duties  to  the  public, 
and  the  court  is  of  opinion  that  those  duties  are,  in  general  terms, 
very  accurately  defined  in  the  following  language,  found  in  section 
931,  3  Cook,  Corp.,  viz. :  "  A  waterworks  company  is  also  a  quasi 
public  corporation.  It  must  supply  water  to  all  who  apply  there- 
for and  offer  to  pay  the  rates."  Indeed,  the  latest  authorities  seem 
very  definitely  to  establish  the  rule  that  water  supply  companies 
like  the  defendant  are  required  to  supply  water  impartially  to 
all  consumers,  and  that  they  cannot  act  capriciously,  nor  discrimi- 

1  Compare  Godwin  v.  Car.  Tel.  &  Tel.  Co.  (1904).  136  N.  O.  258. 

See  Gray  r.  Western  U.  T.  Co.  (1891),  87  Ga.  350,  and  Gist  v.  Tele- 
graph Co.  (1895),  45  S.  C.  344,  as  to  messages  with  regard  to  the  sale  of 
options. 

See  Nye  r.  Western  U.  T.  Co.  (1900),  104  Fed.  628,  and  Western  U.  T. 
Co.  V.  Cashman   (1906),  149  Fed.  367,  as  to  libelous  messages. 

See  State  ex  rcl.  Webster  v.  Nebraska  Tel.  Co.  (18a5),  17  Neb.  12G, 
State  ex  rel.  Payne  v.  Kinlock  Tel.  Co.  (1902),  93  Mo.  App.  349,  and  Cuirj- 
berland  T.  &  T.  Co.  v.  Hobart  (1906),  89  Miss.  252,  as  to  the  right  to  deny 
.service  because  of  outstanding  debt  or  dispute. 

See  State  ex  rel.  Gwynn  v.  Citizens'  Tel.  Co.  (1901),  61  S.  C.  82,  as  to 
the  right  to  deny  service  because  applicant  is  being  served  by  another  tele- 
phone company. 

1  Part  of  the  opinion  is  omitted. —  Ed. 


SEC.    II.]  WHO    MUST   BE    SERVED.  153 

nate  against  any  one  who  is  able  to  pay  for  the  water  supplied. 
In  short,  to  phrase  it  in  familiar  terms,  the  law  does  not  allow 
such  companies  to  unduly  advantage  any  customer  by  doing  for 
him  what  it  will  not  do  for  others  under  circumstances  substan- 
tially the  same.     Griffin  v.  Goldsboro,  123  N.  C.  206,  30  S.  E.  319, 
41  L.  E.  A.  210;  Haugen  v.  Albina,  21  Or.  411,  28  Pac.  244,  14 
L.  E.   A.  424.     Whether   so  intended  or  not  by   defendant,  the 
court  is  of  opinion  that  the  effect  of  what  was  done  in  this  case,  as 
shown  by  the  testimony,  was  to  unduly  discriminate  against  the 
complainant  and  in  favor  of  the  Louisville  Tramway   Sprinkler 
Company,  a  rival  in  the  business  of  street  sprinkling.     Perhaps 
there  can  be  no  two  opinions  upon  this  proposition  of  fact  when  all 
the  testimony  is  attentively  considered,  but  it  is  very  earnestly 
urged  for  the  defendant  that  the  complainant  has,  in  no  event, 
any  right  to  claim  a  supply  of  water  from  the  defendant,  because 
he  is  not  an  "  inhabitant "  of  Louisville,  Ky.,  and  the  language  of 
the  first  section  of  the  charter  of  the  defendant  is  quoted  and 
relied  upon  to  support  the  contention.     That   language   is  that 
Thomas  E.  Wilson  and  others  are  hereby  made  a  corporation  "  with 
power  and  authority  to  construct  and  establish  within  the  city  of 
Louisville  or  elsewhere  for  the  purpose  of  supplying  said  city  and 
its  inhabitants  with  water."     2  Acts  1853-54,  p.  121,  c.  507.     It 
appears  alike  from  the  bill  of  complaint  and  from  the  testimony 
heard  that  the  sole  purpose  for  which  the  water  sought  to  be  ob- 
tained by  the  complainant  is  to  be  used  by  him  is  that  of  sprinkling 
the  streets  in  front  of  the  houses  of  "inhabitants"  of  this  city, 
and  the  court,  in  the  absence  of  any  authority  to  the  contrary,  is 
clearly  of  opinion  that  the  construction  contended  for  is  very  much 
too  narrow.     The   charter   does   not   demand   that   the    "  inhabi- 
tants "  of  Louisville,  in  obtaining  water  for  the  useful,  and,  indeed, 
necessary,  purpose  of  sprinkling  the  streets,  shall  be  allowed  to  get 
it  only   through   the   medium   of   an   "  inhabitant "    of    the    city. 
The  beneficial  thing  —  the  essential  purpose  —  in  this  instance  is 
at  last  to  supply  water  for  the  use  of  "  inhabitants  "  of  Louisville 
alone,  and  that  fact  seems  to  bring  the  case  clearly  within  the  in- 
tention and  the  equity  of  the  statute  creating  the  defendant.     The 
relations  between  the  complainant  and  the  defendant  are  much 
more  accurately  described  by  what  has  just  been  said  than  they 
are  by  the  suggestion  that  the  defendant  is  simply  a  wholesale 
dealer  in  water  and  the  complainant  a  mere  retailer  thereof.     The 
duties  of  the  defendant  to  the  public  imply  very  much  more  than 
it  is  a  mere  vender  of  its  own  property  to  those  to  whom  it  sees 
fit  to  sell  it.     And  so  it  may  be  said  that  the  cost  to  the  com- 
plainant of  the  water  is  a  very  small  part  of  the  cost  of  what  is 


154  THE    SERVICE   TO    BE   RENDERED.  [CHAP.    11. 

required   to   sprinkle   the   streets    for   property    holders   or   their 
tenants.^ 


DETROIT  GAS  CO.  v.  MORETON  TRUCK  AND 
STORAGE  CO. 

Ill  Mich.  401.     1897.^ 

Grant,  J.  Replevin.  Property  replevied:  A  gas  meter  of 
the  value  of  six  or  seven  dollars.  The  cause  of  the  suit:  The 
refusal  of  the  defendant  to  pay  a  bill  for  furnishing  60  feet  of 
gas  pipe,  and  labor,  to  connect  defendant's  stables  with  plaintiff's 
gas-pipe  line.  The  amount  of  the  bill  rendered,  according  to 
plaintiff's  testimony,  was  $7.45,  according  to  defendant's  testimony, 
$11.50.  The  suit  was  instituted  in  justice's  court,  and  was  ap- 
pealed to  the  circuit  court,  and  then  to  this  court.  The  circuit 
court  held  that  title  to  the  meter  was  in  plaintiff,  that  the  right  of 
possession  was  in  defendant,  that  plaintiff  could  not  maintain  the 
action,  refused  to  award  the  return  of  the  property,  and  directed 
the  Jury  to  assess  damages  to  the  defendant,  which  they  did  at 
the  sum  of  $55.  As  long  as  the  law  permits  such  petty  suits  to 
be  appealed  from  one  court  to  another  till  they  reach  the  court 
of  last  resort,   imposing  expense  upon  litigants   and  the  public, 

2  Upon  appeal  the  Circuit  Court  of  Appeals,  in  Louisville  Water  Co.  v. 
Wiemer  (1904),  1.30  Fed.  257,  without  expressly  deciding  the  point  passed 
upon  by  the  court  below,  reversed  the  decision,  declaring  that  the  regula- 
tion, under  which  service  was  denied  to  the  complainant,  was  reasonable, 
namely,  that  water  for  sprinkling  would  only  be  supplied  to  the  one  person 
in  each  district  who  was  approved  of  by  the  largest  number  of  inhabitants. 
But  the  Court  added  : 

"  Similar,  if  not  the  same,  questions  were  involved  in  the  case  of  Fuhring 
against  the  Louisville  Water  Company  (a  case  decided  by  the  Court  of 
Appeals  of  Kentucky  in  1879,  but  not  reported).  That  was  the  case  of  a 
petition  for  a  mandamus  to  compel  this  same  company  to  furnish  water  to 
the  petitioner  wherewith  to  sprinkle  the  streets  of  Louisville.  The  Court 
of  Appeals,  waiving  all  question  of  propriety  of  the  remedy  sought,  and 
assuming  that  the  company  was  bound  to  furnish  an  adequate  supply  of 
water  for  sprinkling  the  streets  of  the  city,  held  that  the  plaintiff,  it  not 
appearing  that  she  resided  or  did  business  or  owned  property  on  any  of 
the  streets  which  she  proposed  to  sprinkle,  had  no  such  special  interest  as 
would  entitle  her  to  the  relief  sought ;  and.  further,  that,  because  of  the 
confusion  and  waste  that  would  otherwise  ensue,  the  company  might  law- 
fully restrict  its  choice  to  one  person,  and  that  such  choice  was  left  to  the 
company,  no  tribunal  being  expressly  appointed  for  that  purpose.  In  that 
case  it  does  not  appear  that  another  had  been  already  licensed,  and  the 
case  goes  upon  the  broad  grounds  that  a  person  having  no  special  interest 
by  reason  of  residence  or  ownership  had  no  right  to  coerce  the  choice  of  the 
company  by  compelling  the  selection  of  himself.  The  case  goes  further  than 
the  present,  for  here  the  company  gave  the  plaintiff  a  chance  to  qualify 
himself  of  which  he  would  not  avail  himself.  The  court  below  thought 
itself  not  bound  by  the  decision  referred  to  for  the  reason  that  the  case 
might  have  been  decided  upon  the  fitness  of  the  remedy.  But  as  we  think 
it  sound  in  respect  to  the  question  involved,  we  accept  it  as  confirmatory 
of  our  own  views,  without  deciding  whether  we  should  be  bound  by  it  or  not." 

1  One  paragraph  dealing  with  questions  of  damages  is  omitted. —  Ed. 


SEC.    II.]  WHO    MUST   BE    SERVED.  155 

costing  many  times  the  amount  involved,  the  courts  must  determine 
them  upon  legal  principles,  notwithstanding  they  take  time  which 
ought  to  be  devoted  to  important  suits. 

Two  questions  are  presented:  (1)  Had  plaintiff  the  right 
to  remove  the  meter?  (2)  If  it  had  not  that  right,  what  is  the 
measure  of  damages? 

1.  In  disposing  of  the  first  question  we  shall  assume  that  the 
defendant  is  liable  for  the  reasonable  cost  of  putting  in  the  service 
pipe.  It  is  conceded  that  the  plaintiff  owns  the  meter,  and  that  it 
may  remove  the  same  for  nonpayment  of  gas  consumed.  It  is 
argued  that  the  company  could  not  remove  it  for  nonpayment 
of  the  bill  for  making  the  connection  and  piping  the  defendant's 
barn,  and  the  court  so  instructed  the  jury.  This  involves  a  de- 
termination of  the  contract  between  the  parties.  The  connection 
was  made,  the  pipe  furnished,  and  the  meter  put  in  for  the  sole 
purpose  of  furnishing  gas  to  the  defendant.  The  agreement  to 
do  these  things  and  to  furnish  gas  were  parts  of  the  same  contract. 
If  the  company  may  remove  its  meter  for  failure  to  comply  with 
the  one  provision  of  the  contract,  it  is  difficult  to  understand  why 
it  may  not  for  failure  to  comply  with  the  other.  The  defendant 
agreed  to  pay  for  both.  The  plaintiff  is  under  no  obligation  to 
continue  to  perform  its  part  of  the  contract  when  the  defendant 
has  refused  compliance.  Under  the  defendant's  contention  the 
gas  company  might  pipe  a  man's  building  at  great  expense,  for 
which  he  agreed  to  pay,  and  when  it  was  done,  and  the  meter  in 
place,  be  compelled  to  furnish  gas  so  long  as  he  paid  for  the  gas 
consumed,  although  he  refused  to  pay  the  other  bill.  Suppose  that 
before  the  meter  was  put  in  the  man  should  refuse  to  pay,  would 
the  company  be  liable  for  damages  for  not  putting  in  the  meter? 
Would  he  be  entitled  to  the  meter  without  first  paying  or  tender- 
ing the  reasonable  cost  of  piping?  To  these  questions  there  can 
be  but  one  answer.  If  A.  agrees  to  place  a  machine,  the  title  to 
which  remains  in  A.,  upon  B.'s  land,  and  to  do  further  work  with 
it  for  B.  after  it  is  so  placed,  upon  condition  that  B.  pay  expenses 
of  moving  and  placing  the  machine,  and  after  A.  has  done  this 
work  B.  refuses  to  pay,  B.  cannot  say  to  A.,  "  I  will  not  pay  you 
for  moving  and  placing  the  machine,  but  you  must  keep  it  on 
my  land  and  work  it  for  my  benefit  so  long  as  I  pay  you  the 
agreed  price  for  its  use."  A.  has  two  remedies.  He  may  either 
remove  his  machine  or  he  may  go  on  with  his  contract  and  sue  B. 
for  the  labor  performed.  This  practically  illustrates  the  defend- 
ant's position, —  that  plaintiff  must  continue  to  perform  its  part 
of  the  contract,  while  defendant  violates  its  part.  Its  counsel  cites 
no  authority  to  support  it.     The  present  case  is  not  one  of  the 


156  THE    SERVICE   TO   BE   RENDEKED.  [CHAP.    IT. 

ordinary  performance  of  labor  or  the  furnishing  of  materials,  un- 
attended with  any  other  conditions.  We  think  the  plaintiff  was 
entitled  to  remove  its  meter,  and  to  maintain  the  action  of  replevin 
upon  refusal  to  deliver  it.^ 


STATE   ex  rel  WOOD   v.   CONSUMEES'   GAS   TRUST    CO. 
157  Ind.  345.     1901.^ 

Mandamus  by  the  state,  on  relation  of  Ann  E,  Wood,  against 
the  Consumers'  Gas  Trust  Company  to  compel  defendant  to  permit 
relatrix  to  use  natural  gas  from  its  main.  From  a  judgment  for 
defendant,  plaintiff  appeals. 

Hadley,  J.  The  things  requested  and  commanded  of  the  ap- 
pellee were  to  lay  a  service  pipe  from  its  main  in  Bellefontaine 
street  to  the  property  line  in  front  of  the  relatrix's  house,  and  to 
permit  her  to  use  the  gas.  The  mandate  is  not  to  furnish  the 
relatrix  with  an  adequate  or  any  definite  amount  of  gas,  but  the 
obvious  force  and  limitations  of  the  request  and  order  are  to  re- 
quire the  appellee  to  furnish  her  with  the  necessary  means,  and 
permit  her  to  use  the  gas  upon  the  same  terms  that  other  in- 
habitants of  the  city  are  permitted  to  use  it.  Is  it  the  legal  duty 
of  appellee  to  do  these  things?  Mandamus  is  a  proper  remedy 
to  compel  appellee  to  furnish  gas  to  the  relatrix  if  it  is  shown 
that  she  is  entitled  to  it.  Portland  Natural  Gas  &  Oil  Co.  v. 
State,  135  Ind.  54,  21  L.  E.  A.  639. 

The  appellee  is  a  corporation  authorized  by  the  legislature  to 
exercise  the  right  of  eminent  domain  (Acts  1889,  p.  22),  and 
licensed  by  the  city  of  Indianapolis  to  lay  pipe  lines  through  its 
streets  and  alleys  for  the  transportation  and  distribution  of  natural 
gas  to  its  customers.  These  rights,  which  involve  an  element  of 
sovereignty,  and  which  can  exist  only  by  grant  from  the  public,  are 
rooted  in  the  principle  that  their  exercise  will  bestow  a  benefit 
upon  that  part  of  the  public  in  whose  behalf  the  grant  is  made, 
and  the  benefit  received  by  the  citizen  is  the  adequate  considera- 

2  As  to  the  right  to  discontinue  services  because  of  a  patron's  failure  to 
pay  a  bill  owed  by  a  former  occupant  of  the  premises,  see  Miller  v.  Wilkes- 
Barre  Gas  Co.  (1903),  20G  Pa.  254.  Under  a  statute  allowing  discontinu- 
ance when  a  person  is  in  arrears,  see  Morey  v.  Metropolitan  Gas  L.  Co. 
(1874),  38  N.  Y.  Super.  Ct.  R.   (6  Jones  &  Sp.)   185. 

As  to  the  right  to  refuse  or  discontinue  service  because  of  a  patron's  fail- 
ure to  pay  for  gas  furnished  to  him  previously  at  other  premises,  see  Gas 
Light  Co.  V.  Colliday  (18(;0),  25  Md.  1;  Mockin  v.  Portland  Gas  Co.  (1000), 
38  Or.  120;  Lloyd  v.  Washington  G.  L.  Co.  (1881),  15  D.  C.  (1  Mackey) 
331.  Under  statute,  see  People  v.  Manhattan  G.  L.  Co.  (1865),  45  Barb. 
136. 

1  Part  of  the  opinion  is  omitted.-^  Ed. 


SEC.    II.]  WHO    MUST   BE    SERVED.  157 

tion  for  the  right  and  convenience  surrendered  by  him.  The  grant 
thus  resting  upon  a  public  and  reciprocal  relation  imposes  upon 
the  appellee  the  legal  obligation  to  serve  all  the  members  of  the 
public  contributing  to  its  asserted  right  impartially,  and  to  per- 
mit all  such  to  use  gas  who  have  made  the  necessary  arrangements 
to  receive  it  and  apply  therefor,  and  who  pay,  or  offer  to  pay,  the 
price,  and  abide  the  reasonable  rules  and  regulations  of  the  com- 
pany. Portland  Natural  Gas  &  Oil  Co.  v.  State,  135  Ind.  54; 
Coy  V.  Indianapolis  Gas  Co.,  146  Ind.  655,  36  L.  E.  A.  535; 
Haugen  v.  Water  Co.,  21  Or.  411,  28  Pac.  244,  14  L.  E.  A.  434; 
People  V.  Manhattan  Gaslight  Co.,  45  Barb.  136;  Crumley  v. 
Watauga  Water  Co.,  99  Tenn.  420,  41  S.  W.  1058;  American 
Waterworks  Co.  v.  State,  46  Neb.  194,  64  N.  W.  711,  30  L.  E.  A. 
447;  State  v.  Butte  City  Water  Co.,  18  Mont.  199,  44  Pac.  966, 
32  L.  E.  A.  697,  56  Am.  St.  Eep.  574. 

But  without  controverting  the  law  as  declared  in  the  foregoing 
cases,  or  claiming  exemption  from  the  rule,  it  is  answered,  as  a 
justification  for  denying  the  relatrix  the  use  of  gas,  that  the  cor- 
poration was  organized  as  a  voluntary  enterprise,  in  the  general 
interest  of  the  people  of  Indianapolis;  that  its  purpose  was  not 
the  making  of  money  for  any  one,  but  to  furnish  gas  to  consumers 
in  the  city  at  the  lowest  possible  rate;  and  that  the  supply  of  gas 
the  corporation  has  on  hand,  or  that  it  may  possibly  procure,  is  in- 
sufficient to  supply  what  customers  it  has  now  connected  with  its 
mains,  in  severely  cold  weather;  and  that  to  permit  the  relatrix 
to  use  gas  would  be  to  further  reduce  the  already  insufficient  sup- 
ply. Will  these  facts  relieve  the  appellee  of  its  duty  to  permit 
the  relatrix  to  use  its  gas?  If  they  will,  then  it  must  be  true 
that  the  relatrix  is  not  entitled  to  share  in  the  gas  furnished  by 
appellee  to  the  inhabitants  of  the  city,  because  her  participation 
will  reduce  the  possible  supply  below  the  full  requirements  of  those 
already  being  served. 

It  is  proper  to  observe  that  the  present  consumers  of  appellee's 
gas  are  not  here  complaining  of  the  quantity  of  gas  received  by 
them,  or  protesting  against  the  admission  of  the  relatrix  to  a 
share  of  the  supply;  and  it  is  difficult  to  see  how  the  appellee, 
while  continuing  to  assert  and  exercise  its  extraordinary  rights, 
may  set  up  its  own  default,  or  probable  default,  to  others  as  a 
legal  excuse  for  the  nonperformance  of  its  duty  to  the  relatrix. 

The  legal  effect  of  the  answer  is  that  the  relatrix  shall  have  no 
gas  because  her  neighbors,  in  common  right,  have  none  to  spare. 
It  is  admitted,  because  not  denied,  that  the  relatrix  is  a  member 
of  that  part  of  the  public  which  appellee  has  engaged  to  serve.  As 
such  she  has  borne  her  part  of  the  public  burdens.     She  has  ren- 


158 


THE   SERVICE   TO    BE   RENDERED.  [CHAP.    II. 


dered  her  share  of  the  consideration.  Bellefontaine  street,  in  front 
of  her  house,  has  been  dug  up,  and  her  property  made  servient 
to  the  use  of  appellee  in  laying  its  pipes  and  in  carrying  forward 
its  business,  and  her  right  to  use  the  gas,  and  to  share  in  the 
public  benefit,  thus  secured,  whatever  it  may  amount  to,  is  equal 
to  the  right  of  any  other  inhabitant  of  the  city.  The  right  to 
gas  is  held  in  common  by  all  those  abutting  on  the  street  in  which 
appellee  has  laid  its  pipes  or  it  is  held  of  right  by  none.  The 
legislature  alone  can  authorize  the  doing  of  the  things  done  by 
appellee,  and  this  body  is  prohibited  by  the  fundamental  law  from 
granting  a  sovereign  power  to  be  exercised  for  the  benefit  of  a 
class,  or  for  the  benefit  of  any  part  of  the  public  less  than  the 
whole  residing  within  its  range.  Cooley,  Const.  Lim.  (6th  Ed.) 
p.  651,  and  cases  cited. 

Appellee's  contract  is  with  the  state,  and  its  extraordinary  powers 
are  granted  in  consideration  of  its  engagement  to  bring  to  the  com- 
munity of  its  operations  a  public  benefit;  not  a  benefit  to  a  few, 
or  to  favorites,  but  a  benefit  equally  belonging  to  every  citizen, 
similarly  situated,  who  may  wish  to  avail  himself  of  his  privilege, 
and  prepare  to  receive  it.  There  can  be  no  such  thing  as  priority 
or  superiority  of  right  among  those  who  possess  the  right  in  com- 
mon. That  the  beneficial  agency  shall  fall  short  of  expectation 
can  make  no  difference  in  the  right  to  participate  in  it  on  equal 
terms.  So,  if  appellee  has  found  it  impossible  to  procure  enough 
gas  to  fully  supply  all,  this  is  no  sufficient  reason  for  permitting 
it  to  say  that  it  will  deliver  all  it  has  to  one  class,  to  the  exclusion 
of  another  in  like  situation.  It  is  immaterial  that  appellee  was 
organized  to  make  money  for  no  one,  but  to  supply  gas  to  the 
inhabitants  of  Indianapolis  at  the  lowest  possible  rate.  It  has 
pointed  us  to  no  special  charter  privilege,  and,  under  the  law  of 
its  creation,  certain  it  is  that  its  unselfish  purpose  will  not  relieve 
it  of  its  important  duty  to  the  public.  The  principle  here  an- 
nounced is  not  new.  It  is  as  old  as  the  common  law  itself.  It  has 
arisen  in  a  multitude  of  cases  affecting  railroad,  navigation,  tele- 
graph, telephone,  water,  gas,  and  other  like  companies,  and  has 
been  many  times  discussed  and  decided  by  the  courts ;  "  and  no 
statute  has  been  deemed  necessary  to  aid  the  courts  in  holding  that, 
when  a  person  or  company  has  undertaken  to  supply  a  demand 
which  is  '  affected  with  a  public  interest,'  it  must  supply  all  alike 
who  are  like  situated,  and  not  discriminate  in  favor  of  nor  against 
any."  45  Cent.  Law  J.  p.  278;  Haugen  v.  Water  Co.,  21  Or.  411; 
Olmsted  v.  Proprietors,  47  N".  J.  Law,  311;  Stern  v.  Wilkes  Barre 
Gas  Co.,  2  Kulp,  499 ;  Chicago  &  N.  W.  Ry.  Co.  v.  People,  56  111. 
365,  8  Am.  Eep.  690;  Nebraska  Tel.  Co.  v.  State,  55  Neb.  627; 


SEC.   II.]  WHO   MUST  BE   SERVED.  159 

Watauga  Water  Co.  v.  Wolfe,  99  Tenn.  429,  41  S.  W.  1060,  63 
Am.  St.  Eep.  841 ;  State  ex  rel.  v.  Delaware  etc.  E.  Co.,  48  N.  J. 
Law,  55,  2  Atl.  803,  57  Am.  Eep.  543. 

In  a  further  material  sense,  the  discrimination  asserted  by  the 
answer  becomes  injurious  to  the  relatrix.  It  is  a  matter  of  com- 
mon knowledge  that  natural  gas  is  a  cheap  and  convenient  fuel, 
and  for  many  reasons  is  eagerly  sought  by  those  who  may  reason- 
ably obtain  it.  It  is  therefore  of  like  knowledge  that,  in  a  com- 
munity where  it  is  supplied  to  some  premises  and  denied  to  others, 
the  effect  is  to  enhance  the  value  of  such  parcels  as  have  it,  by 
making  it  more  desirable  and  profitable  to  occupy  them,  and  to 
depreciate  the  value  of  such  parcels  as  are  excluded  from  its  use. 
It  is  very  clear  that  appellee  may  not,  under  the  guise  of  adminis- 
tering a  public  benefit,  exercise  a  public  power  to  take  the  prop- 
erty of  one  and  confer  it  upon  another. 

The  principal  argument  of  appellee's  counsel  is  that  not  having 
suflBcient  gas  to  supply  its  present  customers,  and  having  exhausted 
every  available  means  for  increasing  its  supply,  it  is  therefore  im- 
possible for  it  to  perform  its  public  duty,  and  mandamus  will 
not  lie  to  compel  an  attempt  to  perform  a  duty  impossible  of  per- 
formance. We  concede  in  the  fullest  terms  that  mandamus  will 
not  lie  to  require  an  attempt  to  do  a  thing  shown  to  be  impos- 
sible. But  this  is  not  the  question  we  have  before  us.  The  rela- 
trix is  not  asking,  nor  the  court  commanding,  that  the  company 
attempt  to  increase  its  supply  of  gas.  The  relatrix  is  only  seeking 
to  be  permitted  to  share  in  the  quantity  of  gas  the  company  has  at 
its  command,  whatever  that  may  be,  on  the  same  terms  that  others 
are  permitted  to  use  it.  There  is  in  the  request  of  the  relatrix 
nothing  unreasonable  and  nothing  impossible  of  performance. 
The  whole  question  comes  to  this:  The  appellee,  under  public 
grant  for  the  dispensation  of  a  public  good,  has  taken  possession 
of  certain  streets  and  alleys  in  Indianapolis  for  the  distribution 
and  sale  of  natural  gas  to  those  abutting  on  its  lines.  The  relatrix, 
owning  a  lot  abutting  on  one  of  appellee's  lines,  erected  thereon  a 
dwelling  house,  and,  upon  the  faith  of  being  permitted  to  use  the 
gas,  has  piped  her  house,  and  constructed  her  heating  apparatus 
of  a  form  suitable  only  to  the  use  of  natural  gas  as  a  fuel,  which 
will  be  worthless  if  natural  gas  is  denied  her.  She  has,  in  common 
with  other  abutters,  been  subjected  to  the  inconvenience  of  having 
the  street  in  front  of  her  house  dug  up  and  had  her  property  oc- 
cupied with  the  company's  pipes.  She  has  made  all  necessary  ar- 
rangements to  receive  the  gas,  has  tendered  appellee  its  usual 
charges,  has  offered  to  abide  by  its  reasonable  rules  and  regulations, 
and  we  perceive  neither  legal  reason,  nor  natural  justice,  in  deny- 


160  THE    SERVICE   TO    BE    RENDERED.  [CHAP.    II, 

ing  her  the  rights  accorded  to  those  of  her  neighbors  who  have  con- 
tributed in  the  same  way  to  appellee's  enterprise.  The  second 
paragraph  of  answer  was  insufficient,  and  the  demurrer  thereto 
should  have  been  sustained. 

Judgment  reversed,  with  instructions  to  sustain  the  demurrer  to 
the  second  paragraph  of  the  return  to  the  alternative  writ  of  man- 
date. 


Section  3. 


The  Right  of  Public  Service  Companies  to  Serve 
Themselves. 

HANNAH  V.  THE  PEOPLE. 
198  111.  77.     1902.^ 

BoGGS,  J.  This  is  an  appeal  by  John  S.  Hannah  from  a  judg- 
ment of  the  circuit  court  of  Cook  county  adjudging  him  guilty  of 
contempt  and  imposing  a  fine  of  $100  for  violating  a  decree  of 
that  court  enjoining  him  and  other  interested  parties  from  storing 
in  the  public  warehouse  of  the  Central  Elevator  Company  any 
grain  directly  or  indirectly  owned  by  or  belonging  to  said  elevator 
company  or  the  firm  of  Carrington,  Hannah  &  Co.,  of  which 
appellant  was  a  member,  or  in  which  said  corporation  or  firm  had 
any  interest  other  than  as  public  warehousemen.  Upon  informa- 
tion in  chancery  theretofore  filed  in  said  circuit  court  by  the  at- 
torney general  against  said  Central  Elevator  Company  and  eight 
other  companies,  they  and  each  of  them,  their  managers,  agents 
and  employes,  had  by  the  decree  of  said  court  been  enjoined  from 
storing  and  mixing  their  own  grain  with  the  grain  of  their  custom- 
ers in  their  own  elevators.  Appeals  were  taken  from  the  decrees 
in  those  cases  to  this  court,  where  they  were  affirmed.  Central 
Elevator  Co.  v.  People,  174  111.  203.  While  these  appeals  were 
under  consideration  in  this  court  the  legislature  passed  an 
act,  approved  May  26,  1897  (Laws  1897,  p.  302),  amending 
section  6  of  the  warehouse  act  of  April  25,  1871,  purporting 
to  make  it  lawful  for  owners,  lessees,  or  managers  of  public  ware- 
houses of  class  A  to  store  their  own  grain  and  mix  it  with  the 
grain  of  others  of  the  same  grade  in  their  own  warehouses,  on  con- 
dition hereinafter  set  forth.  After  this  act  was  adopted,  and 
after  the  decree  was  affirmed  by  this  court,  the  appellant,  as  man- 

1  The  argumpnts  of  oounsel  and  part  of  the  opinion  are  omitted.  Wilkin 
and  Carter,  JJ.,  dissented  without  opinion. —  Ed. 


SEC.    III.]  EIGHT   TO    SERVE    THEMSELVES.  161 

ager  of  the  Central  Elevator  Company,  and  who  was  one  of  the 
owners  of  stock  in  said  company,  with  full  knowledge  of  said 
decree  and  its  affirmance,  and  of  the  perpetual  injunction  thereby 
granted,  stored  and  continued  to  store  the  grain  of  the  elevator 
company,  and  of  the  copartnership  of  which  he  was  a  member,  in. 
the  warehouse  of  said  company,  claiming  the  right  to  do  so  under 
said  amendatory  act  of  1897,  but  disclaiming  any  intent  to  violate 
the  injunction  of  the  court.  In  the  proceedings  instituted  against 
Hannah  as  for  contempt  the  circuit  court  held  that  the  act  of  1897 
was  unconstitutional  and  void,  and  entered  the  judgment  and  im- 
posed the  fine  appealed  from. 

Under  the  constitution  of  1870,  and  the  enactment  of  1871, 
adopted  in  obedience  to  the  constitutional  requirements,  public 
warehouses  licensed  under  the  act  of  1871  are  public  agencies,  and 
licensees  under  that  act  are  to  be  regarded  as  pursuing  a  public 
employment,  and  as  charged  with  the  performance  of  duties  toward 
the  public.  In  applying  for  and  accepting  their  licenses,  such 
warehousemen  voluntarily  submitted  their  business  ajid  their  prop- 
erty to  the  control  of  the  law,  to  the  end  that  the  performance  by 
them  of  their  duties  to  the  public  might  be  accomplished  and  en- 
forced. The  constitution  declares  such  warehouses  shall  be  public 
warehouses.  This  constitutional  provision  impresses  the  business 
of  keeping  a  public  warehouse  with  a  public  use,  and  those  who 
apply  for  and  accept  licenses  to  keep  public  warehouses  under  the 
act  of  1871  voluntarily  occupy  a  relation  to  those  who  store  grain 
in  their  warehouses,  or  have  the  right  to  so  store  grain,  which 
makes  it  incumbent  upon  such  warehousemen  to  discharge  certain 
duties  to  such  owners  and  producers  and  shippers  of  grain.  The 
license  authorizes  the  warehouseman  to  pursue  a  public  employ- 
ment. The  law  implies,  as  a  condition  of  the  acceptance  of  a 
license  to  conduct  a  public  warehouse,  that  the  licensee  is  not  dis- 
qualified upon  any  ground  of  interest  adverse  to  that  of  those 
whom,  by  the  acceptance  of  the  license,  he  undertakes  to  represent 
and  serve,  from  discharging  the  duties  of  a  public  warehouseman, 
and  that  he  will  remain  so  disinterested  and  qualified  while  he 
holds  that  relation  to  the  public.  Speaking  upon  that  subject,  we 
said  in  Central  Elevator  Co.  v.  People,  supra,  p.  207 :  "  It  is 
a  firmly  established  rule  that,  where  one  person  occupies  a 
relation  in  which  he  owes  a  duty  to  another,  he  shall  not  place 
himself  in  any  position  which  will  expose  him  to  the  temptation  of 
acting  contrary  to  that  duty  or  bring  his  interest  in  conflict  with 
his  duty.  This  rule  applies  to  every  person  who  stands  in  such  a 
situation  that  he  owes  a  duty  to  another,  and  courts  of  equity 
have  never  fettered  themselves  by  defining  particular  relations  to 


162  THE    SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

•which  alone  it  will  be  applied.  They  have  applied  it  to  agents, 
partners,  guardians,  executors,  administrators,  directors,  and  man- 
aging officers  of  corporations,  as  well  as  to  trustees,  but  have  never 
fixed  or  defined  its  limits.  The  rule  is  founded  upon  the  plain 
consideration  that  the  one  charged  with  duty  shall  act  with  regard 
to  the  discharge  of  that  duty,  and  he  will  not  be  permitted  to 
expose  himself  to  temptation  or  be  brought  into  a  situation  where 
Ms  personal  interests  conflict  with  his  duty.  Courts  of  equity 
have  never  allowed  a  person  occupying  such  a  relation  to  undertake 
the  service  of  two  whose  interests  are  in  conflict,  and  then  endeavor 
to  see  that  he  does  not  violate  his  duty,  but  forbid  such  a  course  of 
dealing,  irrespective  of  his  good  faith  or  bad  faith.  If  the  duty 
of  the  defendants  as  public  warehousemen  stands  in  opposition  to 
personal  interest  as  buyers  and  dealers  in  grain  storing  the  same 
in  their  own  warehouses,  then  the  law  interposes  a  preventive  check 
against  any  temptation  to  act  from  personal  interest  by  prohibiting 
them  from  occupying  any  such  position.  The  public  warehouses 
established  under  the  law  are  public  agencies,  and  the  defendants, 
as  licensees,  pursue  a  public  employment.  They  are  clothed  with 
a  duty  toward  the  public." 

That  the  exercise  of  the  right  purported  to  be  given  to  the  keep- 
ers of  public  warehouses  by  the  said  amendatory  act  of  1897  to  store 
their  own  grain  in  their  own  warehouses,  mix  it  with  any  grain  of 
otliers  which  they  may  decide  is  of  like  grade  as  their  own  grain, 
and  issue  and  buy  warehouse  receipts  representing  or  purporting 
to  represent  their  own  grain,  etc.,  is  incompatible  with  the  fair, 
faithful,  and  impartial  discharge  of  the  public  employment  of  a 
keeper  of  a  public  warehouse,  is  well  shown  by  the  following  ex- 
tract from  the  opinion  of  this  court  in  said  Central  Elevator  Co.  v. 
People,  supra,  p.  208 :  "  The  evidence  shows  that  defendants, 
as  public  warehousemen  storing  grain  in  their  own  warehouses, 
are  enabled  to,  and  do,  overbid  legitimate  grain  dealers  by  ex- 
acting from  them  the  established  rate  for  storage,  while  they 
give  up  a  part  of  the  storage  charges  when  they  buy  or  sell  for 
themselves.  By  this  practice  of  buying  and  selling  through  their 
own  elevators  the  position  of  equality  between  them  and  the  public 
whom  they  are  bound  to  serve  is  destroyed,  and  by  the  advantage 
of  their  position  they  are  enabled  to  crush  out,  and  have  nearly 
crushed  out,  competition  in  the  largest  grain  market  of  the  world. 
The  result  is  that  the  warehousemen  own  three-fourths  of  all  the 
grain  stored  in  the  public  warehouses  of  Chicago,  and  upon  some 
of  the  railroads  the  only  buyers  of  grain  are  the  warehousemen  on 
that  line.  The  grades  established  for  different  qualities  of  grain 
are  such  that  the  grain  is  not  exactly  of  the  same  quality  in  each 


SEC.    III.]  RIGHT   TO    SERVE    THEMSELVES.  163 

grade,  and  the  difference  in  market  price  in  different  qualities  of 
the  same  grade  varies  from  2  cents  per  bushel  in  the  better  grades 
to  15  cents  in  the  lower  grades.  The  great  bulk  of  grain  is  brought 
by  rail  and  in  car  loads,  and  is  inspected  on  the  tracks,  and  the 
duty  of  the  warehousemen  is  to  mix  the  car  loads  of  grain  as  they 
come.  Such  indiscriminate  mixing  gives  an  average  quality  of 
grain  to  all  holders  of  warehouse  receipts.  Where  the  warehouse- 
man is  a  buyer,  the  manipulation  of  the  grain  may  result  in  per- 
sonal advantage  to  him.  Not  only  is  this  so,  but  the  warehouse 
proprietors  often  overbid  other  dealers  as  much  as  a  quarter  of  a 
cent  a  bushel,  and  immediately  resell  the  same  to  a  private  buyer  at 
a  quarter  of  a  cent  less  than  they  paid,  exacting  storage  which  more 
than  balances  their  loss.  In  this  way  they  use  their  business  as 
warehousemen  to  drive  out  competition  with  them  as  buyers.  It 
would  be  idle  to  expect  a  warehouseman  to  perform  his  duty  to  the 
public  as  an  impartial  holder  of  the  grain  of  the  different  proprie- 
tors, if  he  is  permitted  to  occupy  a  position  where  his  self-interest 
is  at  variance  with  his  duty.  In  exercising  the  public  employment 
for  which  he  is  licensed,  he  cannot  be  permitted  to  use  the  advan- 
tage of  his  position  to  crush  out  competition  and  to  combine  in 
establishing  a  monopoly,  by  which  a  great  accumulation  of  grain  is, 
in  the  hands  of  the  warehousemen,  liable  to  be  suddenly  thrown 
upon  the  market  whenever  they,  as  speculators,  see  profit  in  such 
course.  The  defendants  are  large  dealers  in  futures  on  the  Chi- 
cago Board  of  Trade,  and  together  hold  an  enormous  supply  of 
grain  ready  to  aid  their  opportunities  as  speculators.  The  ware- 
houseman issues  his  own  warehouse  receipt  to  liimself.  As  public 
warehouseman  he  gives  a  receipt  to  himself  as  individual,  and  is 
enabled  to  use  his  own  receipts  for  the  purpose  of  trade  and  to 
build  up  a  monopoly  and  destroy  competition.  That  this  course 
of  dealing  is  inconsistent  with  the  full  and  impartial  performance 
of  his  duty  to  the  public  seems  clear."  And  further  in  the  same 
cause  we  held  it  was  inconsistent  with  the  duties  and  obligations 
the  said  Central  Elevator  Company  owed  to  the  public  for  it  to 
buy  grain  and  store  the  same  in  the  public  warehouse  which  it  was 
licensed  to  conduct,  and  as  public  warehouseman  to  issue  receipts 
or  certificates  for  such  grain  to  itself. 

Judgment  affirmed. 


164:  THE    SERVICE   TO    BE    RENDERED.  [CHAP,    II. 


UNITED  STATES  v.  LEHIGH  VALLEY  EAILEOAD  CO. 

220  U.  S.  257.     1910.^ 

Mr.  Chief  Justice  White  delivered  the  opinion  of  the  court. 

This  case  is  one  of  what  were  known  as  the  commodity  cases, 
previously  decided  and  reported  in  United  States  v.  Delaware  & 
Hvidson  Co.,  213  U.  S.  366.  The  controversy  now  is  but  a  sequel 
to  that  disposed  of  in  the  previous  cases.  To  understand  the 
question  now  for  consideration  it  is  essential  to  have  in  mind  the 
contentions  which  arose  for  decision  upon  the  previous  appeal  and 
the  disposition  which  was  made  of  them.  "We  therefore  refer  to 
those  subjects. 

The  United  States  proceeded,  both  by  suits  in  equity  and  man- 
damus, against  certain  railroad  companies,  including  the  Lehigh 
Valley,  to  prohibit  them  from  transporting  coal  in  interstate  com- 
merce in  violation  of  what  were  deemed  to  be  the  prohibitions  of 
the  fifth  paragraph  of  the  1st  section  of  the  act  to  regulate  com- 
merce, as  amended  on  June  29,  1906,  usually  referred  to  as  the 
commodities  clause  of  the  Hepburn  act.     The  clause  is  as  follows : 

"  From  and  after  May  first,  nineteen  hundred  and  eight,  it  shall 
be  unlawful  for  any  railroad  company  to  transport  from  any  state, 
territory,  or  the  District  of  Columbia  to  any  other  state,  territory, 
or  the  District  of  Columbia,  or  to  any  foreign  country,  any  article 
or  commodity,  other  than  timber  and  the  manufactured  products 
thereof,  manufactured,  mined,  or  produced  by  it,-  or  under  its  au- 
thority, or  which  it  may  own  in  whole  or  in  part,  or  in  which  it 
may  have  any  interest,  direct  or  indirect,  except  such  articles  or 
commodities  as  may  be  necessary  or  intended  for  its  use  in  the  con- 
duct of  its  business  as  a  common  carrier."     34  Stat.  584,  c.  3591. 

In  effect,  the  contention  of  the  government  was  that  the  clause 
in  question  prohibited  railroad  companies  from  moving  in  the  chan- 
nels of  interstate  commerce  articles  or  commodities  other  than  the 
articles  excepted  by  the  provision,  which  had  been  manufactured, 
mined,  or  produced  by  the  companies  or  under  their  authority,  or 
which  were,  at  the  time  of  the  transportation,  owned  by  them,  or 
which  had  been  previously  owned  by  them  in  whole  or  in  part,  or 
in  which  the  companies  then  or  previously  had  any  interest,  direct 
or  indirect.  The  government,  moreover,  insisted  that  these  gen- 
eral propositions  embraced  the  movement  by  the  companies  in  in- 
terstate commerce  of  a  commodity  which  had  been  manufactured, 
mined,  or  produced  by  a  corporation  in  which  the  transporting 

1  The  arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


SEC.    III.]  RIGHT    TO    SERVE   THEMSELVES.  165 

railroad  company  was  a  stockholder,  irrespective  of  the  extent  of 
such  stock  ownership.  The  railroad  companies  in  effect  defended 
the  suits  upon  the  ground  that  the  statute,  as  construed  by  the 
government,  was  repugnant  to  the  Constitution. 

In  coming  to  determine  whether  the  government  was  correct  in 
its  contention  that  these  prohibitions  operated  to  prevent  a  rail- 
road company  from  transporting  a  product  because  it  was  owned 
by  or  had  been  mined,  manufactured,  or  produced  by  a  corpora- 
tion in  which  the  railroad  company  was  the  owner  of  stock,  irre- 
spective of  the  amount  of  such  stock  ownership,  it  was  expressly 
decided  that  the  prohibitions  of  the  statute  were  addressed  only  to 
a  legal  or  equitable  interest  in  the  commodities  to  which  the  pro- 
hibitions referred;  that  they  therefore  did  not  prohibit  a  railroad 
company  from  transporting  commodities  mined,  manufactured, 
produced,  or  owned  by  a  distinct  corporation,  merely  because  the 
railroad  company  was  the  owner  of  some  or  all  of  the  stock  in  such 
corporation. 

Summing  up  its  review  as  to  the  true  construction  of  the  com- 
modities clause,  the  court  held  (p.  415)  that  it  prohibited  "a  rail- 
road company  engaged  in  interstate  commerce  from  transporting 
in  such  commerce  articles  or  commodities  under  the  following  cir- 
cumstances and  conditions:  (a)  When  the  article  or  commodity 
has  been  manufactured,  mined,  or  produced  by  a  carrier  or  under 
its  authority,  and  at  the  time  of  transportation  the  carrier  has  not 
in  good  faith,  before  the  act  of  transportation,  dissociated  itself 
from  such  article  or  commodity;  (b)  when  the  carrier  owns  the 
article  or  commodity  to  be  transported,  in  whole  or  in  part;  (c) 
when  the  carrier,  at  the  time  of  transportation,  has  an  interest, 
direct  or  indirect,  in  a  legal  or  equitable  sense,  in  the  article  or  com- 
modity, not  including,  therefore,  articles  or  commodities  manu- 
factured, mined,  or  produced  or  owned,  etc.,  by  a  bona  fide  cor- 
poration in  which  the  railroad  company  is  a  stockholder." 

Thus  construed,  the  clause  was  held  to  be  within  the  power  of 
Congress  to  enact. 

Accordingly,  the  mandate  of  this  court  provided  that  the  cause 
"be,  and  the  same  is  hereby,  remanded  to  the  said  circuit  court 
for  further  proceedings  in  conformity  with  the  opinion  of  this 
court." 

Upon  the  filing  of  the  mandate,  the  court  below  vacated  its  de- 
cree dismissing  the  bill  in  this  (the  equity)  cause,  and  reinstated 
the  case  upon  the  docket.  The  United  States  then  presented  an 
amended  bill  and  asked  leave  to  tile  it.  The  amendment  contained 
copious  averments  in  regard  to  the  actual  relations  existing  be- 
tween the  railroad  company  and  one  of  the  coal  companies  men- 


166  THE    SERVICE   TO    BE   RENDERED.  [CHAP.    II. 

tioued  in  the  original  bill,  viz.,  the  Lehigh  Valley  Coal  Company. 
In  substance  it  was  averred  that  as  to  this  particular  coal  company, 
the  railroad  company  was  not  only  the  owner  of  all  the  stock  issued 
by  the  coal  company,  but  that  the  railroad  company  so  used  the 
power  thus  resulting  from  its  stock  ownership  as  to  deprive  the  coal 
company  of  all  real,  independent  existence,  and  to  make  it  vir- 
tually but  an  agency  or  dependency  or  department  of  the  railroad 
company.  In  other  words,  in  great  detail  facts  were  averred  which 
tended  to  establish  that  there  was  no  distinction  in  practice  between 
the  coal  company  and  the  railroad  company,  the  latter  using  the 
coal  company  as  a  mere  device  to  enable  the  railroad  company  to 
violate  the  provisions  of  the  commodities  clause. 

It  was  charged  that  by  these  abuses  the  production,  shipment, 
and  sale  of  all  the  coal  within  the  territory  served  by  the  railroad 
company  was  brought  within  the  dominion  of  that  company  prac- 
tically to  the  same  extent  as  if  it  was  the  absolute  owner  of  the 
same.     Finally  it  was  alleged  as  follows : 

"  That  by  virtue  of  the  facts  hereinbefore  set  out  and  otherwise, 
and  more  particularly  by  virtue  of  the  control,  direction,  domina- 
tion, and  supervision  exercised  by  the  persons  who  are  the  offi- 
cers of  the  defendant  railroad  and  by  the  defendant  over  all  the 
operations  of  the  said  coal  company,  embracing  the  mining  and 
production  of  said  coal,  the  shipment  and  transportation  of  the  same 
over  the  defendant  railroad,  and  the  sale  thereof  at  the  seaboard,  it 
follows : 

"  First.  That  the  coal  company,  not  being  in  substance  and  in 
good  faith  a  hona  fide  corporation,  separate  from  the  defendant, 
but  a  mere  adjunct  or  instrumentality  of  the  defendant,  the  de- 
fendant, at  the  time  of  transportation,  has  an  interest,  direct  or 
indirect,  in  a  legal  or  equitable  sense,  in  said  coal. 

"  Second.  That  said  coal  of  said  coal  company  is  mined  and 
produced  under  the  authority  of  defendant,  and  the  defendant, 
at  the  time  of  transportation  and  before  the  act  of  transportation, 
has  not  in  good  faith  dissociated  itself  from  all  exercise  of  author- 
ity over  said  coal,  but  continues  to  exercise  authority  over  said  coal 
at  the  time  of  transportation,  and  over  the  subsequent  sale  thereof." 

On  the  objection  of  the  railway  company,  the  court  denied  the 
request  of  thQ  United  States  for  leave  to  file  the  amended  bill. 
The  United  States  then  moved  for  a  decree  dismissing  its  original 
bill  without  prejudice,  and  after  argument  that  motion  also  was 
denied.  Thereupon  counsel  for  the  railroad  company  moved  to  dis- 
miss the  bill  absolutely,  and  upon  the  statement  of  counsel  for  the 
United  States  that  it  "  would  not  proceed  any  further,  in  view  of 
the  fact  that  the  proposed  amendment  had  been  disallowed,"  the 


SEC.    III.]  EIGHT   TO    SERVE   THEMSELVES.  16T 

court  reached  the  conclusion  "  that  the  bill  should  be  dismissed 
absolutely  upon  the  allegations  of  the  bill  and  answer."  A  decree 
to  that  effect  was  entered,  and  the  government  prosecutes  this  ap- 
peal, relying  for  reversal  upon  the  error  which  it  is  insisted  was 
committed  in  refusing  to  allow  the  proposed  amended  bill  to  be 
filed,  and  in  dismissing  the  suit. 

Our  duty  is  to  enforce  the  statute,  and  not  to  exclude  from  its 
prohibitions  things  which  are  properly  embraced  within  them.  Com- 
ing to  discharge  this  duty  it  follows,  in  view  of  the  express  prohi- 
bitions of  the  commodities  clause,  it  must  be  held  that  while  the 
right  of  a  railroad  company  as  a  stockholder  to  use  its  stock  owner- 
ship for  the  purpose  of  a  bona  fide  separate  administration  of  the 
affairs  of  a  corporation  in  which  it  has  a  stock  interest  may  not  be 
denied,  the  use  of  such  stock  ownership  in  substance  for  the  pur- 
pose of  destroying  the  entity  of  a  producing,  etc.,  corporation,  and 
of  commingling  its  affairs  in  administration  with  the  affairs  of  the 
railroad  company,  so  as  to  make  the  two  corporations  virtually  one, 
brings  the  railroad  company  so  voluntarily  acting  as  to  such  pro- 
ducing, etc.,  corporation  within  the  prohibitions  of  the  commodities 
clause/^  In  other  words,  that  by  operation  and  effect  of  the  com- 
modities clause  there  is  a  duty  cast  upon  a  railroad  company  pro- 
posing to  carry  in  interstate  commerce  the  product  of  a  producing, 
etc.,  corporation  in  which  it  has  a  stock  interest,  not  to  abuse  such 
power  so  as  virtually  to  do  by  indirection  that  which  the  commodi- 
ties clause  prohibits, —  a  duty  which  plainly  would  be  violated  by 
the  unnecessary  commingling  of  the  affairs  of  the  producing  com- 
pany with  its  own,  so  as  to  cause  them  to  be  one  and  inseparable. 

Deciding,  as  we  do,  that  error  was  committed  in  denying  leave 
to  file  the  proposed  amended  bill,  the  decree  below  is  reversed  and 
the  cause  remanded  with  directions  for  further  proceedings  in 
conformity  with  this  opinion.^ 

2  For  a  further  application  of  the  Commodities  Clause,  see  Delaware,  L. 
&  W.  R.  R.  Co.  V.  United  States   (1913),  231  U.  S.  363. 

See  New  York,  N.  H.  &  H.  R.  R.  Co.  v.  Interstate  Com.  Com.  (1905). 
2(X)  U.  S.  361,  decided  before  the  passage  of  the  Commodities  Clause. 


CHAPTER  III 
THE  EIGHT  TO  MAKE  RULES  FOR  THE  SERVICE. 

(hAEP  v.  CHOCTAW,  OKLAHOMA  &  GULF  EAILROAD  CO. 

125  Fed.  445.     1903.^ 

Thayer,  Circuit  Judge.  The  facts  developed  at'  the  trial  below, 
concerning  which  there  was  practically  no  controversy,  are  these: 
From  September,  1900,  to  February  15,  1903,  and  thereafter,  the 
Choctaw,  Oklahoma  &  Gulf  Eailroad  Company,  the  defendant  in 
error,  operated  a  line  of  railroad  extending  from  El  Eeno,  in  the 
territory  of  Oklahoma,  tlience  eastwardly  through  the  territory  of 
Oklahoma,  the  Indian  Territory,  and  the  state  of  Arkansas,  to 
Memphis,  Tennessee.  Coal  fields  existed  along  this  line  of  road 
from  South  McAlister,  in  the  Indian  Territory,  eastward  to  a  point 
between  Hartford  and  Mansfield,  both  of  the  latter  places  being  in 
the  state  of  Arkansas,  or  for  a  distance  altogether  of  about  100 
miles.  The  defendant  company  made  a  practice  of  hauling  coal 
taken  from  the  mines  contiguous  to  its  road,  which  belonged  either 
to  itself  or  to  other  persons  and  corporations,  and  about  60  or  70 
per  cent,  of  its  traffic  was  of  that  character.  When  a  mine  owner, 
other  than  the  defendant  company,  desired  to  employ  the  defendant 
to  haul  his  coal,  he  made  application  to  that  efl^ect  to  the  company, 
and  if,  on  an  examination  of  the  applicant's  mine  by  the  executive 
officers  of  the  railroad,  the  quantity  of  coal  therein  seemed  to  be 
adequate  to  justify  the  expense,  the  general  practice  was  to  enter 
into  an  agreement  with  the  mine  owner  whereby  the  latter  under- 
took to  procure  the  right  of  way  and  grade  a  track  leading  from 
the  railroad  to  his  mine,  and  to  supply  the  necessary  ties,  the  rail- 
road, on  its  part,  agreeing  to  furnish  the  necessary  iron  and  to  lay 
the  track,  and  thereafter  keep  the  track  and  roadbed  in  good  re- 
pair. It  was  also  the  usual  practice  in  such  agreements  to  require 
the  mine  owner  to  develop  his  mine  so  that  it  would  supply  a  cer- 
tain number  of  cars  of  coal  per  day,  and  to  equip  it  with  tipples 
and  screens  so  that  coal  could  be  conveniently  and  speedily  loaded 
into  cars  at  the  mine.  In  the  month  of  September,  1900,  the  de- 
fendant's road  in  the  vicinity  of  Hartford,  Ark.,  had  been  re- 

1  Part  of  the  opinion  is  omitted. —  Ed. 


EIGHT   TO    MAKE    RULES    FOR    SERVICE,  169 

cently  constructed,  and  the  volume  of  traffic  at  that  station  was 
small.     The  railroad  company,  before  building  its  road  eastwardly 
into  the  state  of  Arkansas,  had  bought  about  1,600  acres  of  coal 
land  near  Hartford,  and  had  located  its  station  at  that  point  on  a 
part  of  the  tract.     The  coal  fields  in  that  vicinity  had  been  only 
slightly  developed  in  the  month  of  September,  1900,  but  there  was 
one  coal  mine  called  Glenn's  Bank  that  had  been  opened  near  the 
station  to  supply  the  local  demand  for  coal,  and  after  the  railroad 
was  opened  for  business,  and  during  the  fall  of  the  year  1900  and 
the  winter  of  1901,  the  parties  controlling  this  mine  were  allowed 
to  haul  coal  to  the  station  by  wagons  and  load  it  on  cars  that  were 
set  out  upon  a  side  track.     The  plaintiff  at  that  time  was  also  in 
possession  of  a  mine  near  the  station,  and  at  his  request,  and  as 
the  traffic  at  the  station  was  not  large,  he  was  accorded  the  same 
privilege  of  loading  coal  from  wagons  into  cars  standing  on  the 
house  track,  which  privilege  he  continued  to  exercise  until  the 
spring  of  the  year  1901,  up  to  which  time,  during  a  period  of  seven 
or  eight  months,  he  had  loaded  altogether  something  over  300  cars. 
During  the  period  in  question  the  railroad  company  did  not  per- 
mit coal  to  be  loaded  from  wagons  into  cars  standing  upon  its  side- 
tracks at  any  of  its  stations,  except  at  the  Hartford  station,  and 
at  one  other  station  called  Eed  Oak,  in  the  Indian  Territory,  at 
which  latter  place,  as  it  seems,  the  practice  was  pursued  temporarily 
until  a  spur  track  could  be  completed  to  the  mine,  which  was  some 
distance  from  the  railroad.     The   defendant  gave  permission  to 
load  coal  from  wagons  at  Hartford  mainly,  if  not  entirely,  for  the 
purpose  of  aiding  in  the  development  of  the  coal  measures  at  that 
point,  but  with  no  intention  on  its  part  of  receiving  coal  perma- 
nently in  that  way,  or  of  permitting  its  station  side  tracks  to  be 
used  continuously  for  the  purpose  of  standing  coal  cars  thereon  to 
be  loaded  from  wagons.     Some  time  in  the  spring  of  the  year 
1901,  or  the  early  summer  of  that  year,  the  plaintiff  was  advised, 
by  officers  of  the  railroad  company,  that  the  practice  of  setting  out 
ears  on  the  station  side  tracks  to  be  loaded  from  wagons  would 
have  to  be  discontinued.     Thereafter  there  were  several  interviews 
between  the  plaintiff  and  persons  representing  the  railroad  com- 
pany relative  to  the  construction  of  a  spur  track  to  the  plaintiff's 
mine  for  his  benefit  and  accommodation.     The  railroad  company 
appears  to  have  been  willing  at  all  times  to  lay  such  a  track  and  to 
furnish  the  iron  therefor,  provided  the  plaintiff  would  secure  a 
right  of  way  and  do  the  grading.     The  plaintiff  on  his  part  appears 
to  have  been  willing  at  first  to  accept  this  proposition.     They  dif- 
fered, however,  as  to  the  place  where  the  spur  track  should  con- 
nect with  the  main  line  of  the  road;  the  plaintiff  insisting  that 


170  EIGHT    TO    MAKE    RULES    FOR    SERVICE.  [CHAP.    III. 

the  connection  should  he  made  at  the  station  house  at  Hartford, 
and  the  defendant  objecting  to  a  connection  at  that  point.  The 
negotiations  looking  to  the  construction  of  a  spur  track  accordingly 
fell  through,  and  on  August  15,  1902,  the  defendant  company 
peremptorily  declined  to  permit  cars  to  be  further  loaded  from 
wagons  at  its  station  or  house  track,  the  reason  assigned  for  such 
action  being,  in  substance,  that  it  was  the  universal  practice  of  all 
railroads  engaged  in  hauling  coal  to  require  mine  owners  and 
coal  shippers  to  have  tipples  and  tracks  whereby  coal  could  be 
speedily  loaded  direct  from  the  mines,  and  because  of  the  annoy- 
ance, inconvenience,  and  delay  necessarily  attendant  upon  the  load- 
ing of  coal  cars  from  wagons  at  stations.  The  plaintiff  thereafter 
made  complaint  concerning  the  defendant's  action  to  the  board  of 
railroad  commissioners  of  the  state  of  Arkansas,  and  in  view  of 
threatened  action  by  that  body  the  defendant  company  on  October 
7,  1902,  again  permitted  cars  to  be  loaded  at  the  Hartford  station 
from  wagons,  provided  the  coal  so  loaded  was  consigned  to  points 
within  the  state  of  Arkansas.  At  a  later  date,  in  January,  1902, 
for  the  same  reason  —  that  is  to  say,  because  of  action  taken  or 
threatened  to  be  taken  by  the  board  of  railroad  commissioners  for 
the  state  of  Arkansas,  and  to  avoid  the  possible  assessment  of 
heavy  penalties  —  the  order  against  loading  from  wagons  at  the 
Hartford  station,  as  respects  coal  consigned  to  any  point  on  the 
defendant's  railroad,  either  within  or  without  the  state  of  Arkansas, 
was  revoked. 

The  fundamental  question  which  this  state  of  facts  presents  would 
seem  to  be  whether  the  defendant  company,  by  setting  out  coal 
cars  on  its  house  track  at  Hartford,  and  permitting  them  to  be 
loaded  from  wagons  for  a  period  of  several  months,  under  the  cir- 
cumstances above  detailed,  thereby  obligated  itself  to  continue  that 
practice,  and  was  guilty  of  a  legal  wrong  when  it  discontinued  it 
in  August,  1901.  Undoubtedly  a  common  carrier  must  accept  and 
transport  all  commodities  that  are  tendered  to  it  for  carriage  which 
it  holds  itself  out  to  the  world  as  engaged  in  carrying,  provided 
a  reasonable  compensation  for  the  service  is  also  tendered.  Un- 
like a  private  carrier,  it  is  not  entitled  to  choose  its  patrons  or  cus- 
tomers, but,  being  a  quasi  public  servant,  must  serve  everybody  who 
chooses  to  employ  it,  and  must  treat  them  impartially,  charging 
each  the  same  rate  for  substantially  the  same  service,  and  affording 
to  each  the  same  facilities  for  shipment.  A  common  carrier,  how- 
ever, is  not  bound  by  the  rules  of  the  common  law  to  receive  and 
carry  commodities  of  any  and  every  kind  which  may  be  offered  to 
it,  but  only  such  as  it  makes  a  practice  of  transporting.  It  is  en- 
titled in  the  first  instance  to  determine  what  class  of  commodities 


RIGHT   TO    MAKE    RULES    FOR   SERVICE.  171 

it  will  engage  in  carrying.     Moreover,  it  is  entitled,  in  the  first  in- 
stance, by  the  common  law,  to  establish  reasonable  rules  and  regu- 
lations governing  the  manner  and  form  in  which  it  will  receive 
such  articles  as  it  professes  to  carry,  and  providing  how  they  shall 
be  packed  for  shipment  so  that  they  may  be  handled  and  trans- 
ported conveniently,  safely,  and  expeditiously.     Hutchinson  on  Car- 
riers, §§  111-113,  and  cases  there  cited.     This  power  to  make  rea- 
sonable regulations  with  respect  to  the  manner  in  which  it  will  re- 
ceive commodities  for  transportation  implies  the  existence  of  a 
power  on  the  part  of  a  common  carrier  to  change  or  modify  such 
regulations  from  time  to  time  upon  reasonable  notice  to  the  public, 
as  otherwise  it  might  be  compelled  to  pursue  a  particular  practice 
of  receiving  goods  which  it  had  once  adopted,  and  was  at  the  time 
attended  with  no  inconvenience,  after  that  practice  had  become  ex- 
ceedingly inconvenient  and  burdensome  both  to  itself  and  the  pub- 
lic.    It  is  manifest,  we  think  (indeed,  so  manifest  that  we  might 
almost  take  judicial  notice  of  the  fact),   that  no  railroad   con- 
structed through  extensive  coal  fields  and  engaged  in  transporting 
coal  to  market  could  for  any  considerable  period  follow  the  practice 
of  setting  out  cars  on  its  station  side  tracks,  some  distance  from 
the  place  where  coal  is  mined,  and  permitting  coal  to  be  hauled 
thence  by  wagons  and  loaded  into  the  cars  by  the  slow  process  of 
shoveling.     The  useless  consumption  of  time,  and  the  additional 
expense  incident  to  the  handling  of  the  commodity  in  question,  in 
large  quantities,  in  that  primitive  manner,  would  occasion  great 
public  loss  and  inconvenience,  to  say  nothing  of  the  loss  sustained 
by  the  carrier,  and  the  serious  manner  in  which  that  method  of 
liandling  coal  would  interfere  with  the  movement  of  its  trains  and 
the  transaction  of  its  other  business.     In  the  case  at  bar  one  of  the 
witnesses  testified,  in  substance,  that,  if  all  the  coal  tributary  to 
the  defendant's  railroad  was  loaded  by  wagon,  the  mines  would  not 
produce  20  per  cent,  of  their  present  output  because  of  the  impos- 
sibility of  handling  the  output  in  that  way.     This  is  in  itself  an 
entirely  reasonable  statement,  and  no  attempt  was  made  by  the 
plaintiff  to  disprove  it;  his  contention  being  apparently  that,  be- 
cause the  defendant  had  permitted  him  to  load  coal  from  wagons 
for  a  few  months,  it  had  deliberately  chosen  that  method  of  re- 
ceiving coal  and  serving  the  public,  and  was  bound  perforce  to 
continue  the  practice  indefinitely.     We  are  of  opinion  that  this 
contention  oh  the  part  of  plaintiff  is  untenable,  and  should  be  over- 
ruled.    The  evidence   shows   without  contradiction,   as   heretofore 
stated,  that  the  practice  of  permitting  a  shipper  of  coal  to  load 
cars  from  wagons  at  stations  obtained  at  no  other  station  along 
the  defendant's  road  save  at  Hartford  and  Eed  Oak,  where  the  prac- 


172  RIGHT    TO    MAKE    RULES    FOR    SERVICE.  [CHAP.    III. 

tice  was  tolerated  temporarily,  and  for  special  reasons,  with  no 
thought  of  pursuing  it  permanently.     The  great  bulk  of  coal  that 
the  defendant  received  and  transported  over  its  road  was  loaded 
by  means  of  tipples  into  cars  standing  on  spur  tracks  which  had 
been  laid  to  the  mines,  and  in  so  far  as  the  defendant  had  held 
itself  out  to  the  world  as  a  common  carrier  of  coal  it  can  only  be 
said  to  have  so  held  itself  out  provided  the  commodity  was  so  de- 
livered and  loaded.     We  entertain  no  doubt  that  the  defendant  had 
the  right  to  abandon  the  method  of  receiving  coal  which  it  had 
adopted  at  Hartford  when  the  conditions  that  led  to  the  practice 
at  that  station  had  so  far  changed  as  to  render  its  further  continu- 
ance inconvenient  and  burdensome.     Especially  should  this  right 
be  conceded  to  the  defendant  when  we  reflect  that  if  it  permitted 
coal  to  be  hauled  to  that  station  in  wagons,  and  thence  loaded  into 
cars,  other  mine  owners  along  its  line  might  and  probably  would 
assert  the  same  privilege,  thereby  subjecting  it  to  great  loss  and 
expense,  besides  putting  the  public  to  much  inconvenience.     That 
conditions  had  materially  changed  at  the  Hartford  station  between 
September,  1900,  and  August,  1901,  admits  of  no  controversy.     It 
was  proven  at  the  trial,  and  not  denied,  that  in  the  meantime  the 
defendant  had  disposed  of  its  coal  land  at  that  point;  that  several 
large  mines  had  been  opened  in  the  immediate  vicinity  of  that 
place ;  that  the  station  had  become  a  large  shipping  point  for  coal ; 
that  the  volume  of  traffic  at  that  place,  as  well  as  along  the  road 
generally,  had  largely  increased  during  the  year ;  that  the  demand 
for  cars  in  August,  1901,  to  handle  coal  and  other  products  which 
required  shipment,  was  far  greater  than  during  the  previous  year ; 
and  that  the  public  interest,  as  well  as  the  interest  of  the  carrier, 
demanded  that  there  should  be  as  little  delay  as  possible  in  loading 
cars.     Under  these  circumstances,  we  think  that  the  defendant  in- 
curred no  liability  in  refusing  to  permit  its  station  side  track  to 
be  further  used  for  loading  coal  cars  from  wagons.     Nor  do  we 
find  that  when  the  trial  below  ended  any  issue  of  fact  as  respects 
this  point  remained  to  be  settled  or  decided  by  the  jury,  since  all 
the  material  facts  upon  which  the  defendant's  right  to  terminate 
the  practice  of  loading  cars  from  wagons  depended  were  practically 
undisputed,  and  the  existence  or  nonexistence  of  that  right  was  a 
question  of  law  to  be  determined  by  the  court. 


RIGHT    TO    MAKE    RULES    FOR    SERVICE.  173 

DE  BOAED  V.  CAMDEN"  INTEESTATE  EAILWAY  CO. 

62  W.  Va.  41.     1907.^ 

PoFFENBARGER,  Judge.  The  railway  company  operated  street 
car  lines  on  Third  avenue  and  Fourth  avenue  of  the  city  of  Hunt- 
ington. What  connection  these  two  lines  had  is  not  clearly  shown, 
but  transfers  were  given  by  the  conductors  on  the  Third  Avenue 
line  which  were  good  for  passage  on  the  Fourth  Avenue  line,  if 
presented  within  one  hour  from  the  time  of  their  issuance,  shown 
by  punch  marks  in  the  margin  thereof.  The  plaintiff,  an  employe 
in  the  American  Car  &  Foundry  shops,  situated  in  the  eastern  end 
of  the  city,  took  passage  on  a  Tliird  Avenue  car  going  west,  paid 
his  fare,  and  took  a  transfer  from  the  conductor.  Having  crossed 
over  to  Fourth  avenue  and  waited  a  few  minutes,  he  observed  a  car 
standing  below  Ninth  street  and  started  down  to  it.  Before  he  ar- 
rived, the  car  moved  on,  and  he  walked  on  after  it  until  another 
car  came  down,  which  he  boarded,  and  handed  the  conductor  the 
transfer.  He  Avas  informed  by  the  conductor  that  the  transfer  was 
not  good  for  a  passage  on  the  car,  although  presented  within  an 
hour  after  the  time  at  which  it  had  been  issued  because  it  was  ten- 
dered below  a  place  known  as  "Johnson's  Lane."  He  refused  to 
pay  any  additional  fare,  and  was  ejected  from  the  car.  He  re- 
sisted removal,  and  the  conductor  rang  for  the  motorman,  who 
came  back  with  a  crank  in  his  hand,  with  which  he  struck  the 
plaintiff  across  the  knuckles  to  make  him  let  loose  of  the  bar  to 
which  he  was  clinging. 

So  much  of  the  transfer  as  is  material  reads  as  follows: 

Free  Transfer. 

Good  only  as  indicated,  if  presented  within  one  hour  from  time 
and  date  punched  in  margin  —  not  transferable  —  and  is  accepted 
by  passenger  upon  condition  that  the  Company  is  not  responsible 
for  any  error  upon  the  part  of  the  conductors  in  punching  time 
and  dates. 

Camden  Interstate  Eailway  Co. 

It  does  not  disclose  any  such  limitation  as  to  the  place  at  which 
it  must  be  used  as  was  enforced  by  the  conductor.  It  appears  from 
the  testimony  of  a  witness  for  the  defendant  that  there  was  a  rule 
forbidding  its  acceptance  below  Johnson's  Lane,  posted,  among 
others,  in  the  defendant  company's  barn,  to  which  the  public  were 
not  admitted. 

1  Part  of  the  opinion  is  omitted. —  Ed. 


174:  RIGHT    TO    MAKE   RULES    FOR   SERVICE,  [CHAP.    III. 

The  plain  and  undisputed  state  of  facts,  shown  by  the  evidence, 
renders  it  unnecessary  to  consider  many  of  the  principles  of  law 
applicable  to  the  rights  of  passengers  and  common  carriers,  re- 
spectively, growing  out  of  contracts  for  carriage.     On  the  face  of 
the  transfer  but  one  limitation  appeared,  namely,  that  it  should  be 
used  within  one  hour  after  the  issuance  thereof.     If  presented 
within  that  time,  on  the  face  thereof,  it  entitled  the  holder  to  a 
westward  passage  on  any  car  of  the  company  running  on  Fourth 
avenue.     There  is  no  evidence  tending  in  the  slightest  degree  to 
show  that  the  plaintiff  had  any  knowledge  of  any  limitation  upon 
that  right.     According  to  all  the  authorities,  a  paper  so  handed 
him,  without  any  explanation,  or  any  knowledge  on  his  part  of  any 
limitation,  constituted  the  contract  between  him  and  the  company. 
Unlike  steam  railroads,  street  railways  do  not  have  a  certain  fare 
for  passage  between  given  points.     The  nature  of  their  business  is 
such  as  to  compel  them,  for  the  most  part,  to  charge  a  certain  fare 
for  a  passage  without  reference  to  the  distance;  this,  at  least,  was 
the  method  of  the  defendant  company.     The  paper,  on  its  face, 
therefore,  entitled  the  plaintiff  to  carriage,  and  knowledge  of  a 
secret  limitation  embodied  in  some  rule  which  he  had  never  seen 
could  not  be  imputed  to  him.    That  rule,  therefore,  constituted  no 
part  of  the  contract.     "  Kailway  passengers  are  not  required  to 
know  the  rules  and  regulations  made  by  the  directors  of  a  company 
for  the   control  of   the   actions   of   its   agents   and   the   manage- 
ment of  its   affairs."     Hufford   v.   Eailroad   Co.,   64   Mich.    631, 
8   Am.   St.  Eep.   859.     In  that  case,  this  principle  was  applied 
j  in   favor   of   a  passenger   who   had   relied   upon   the   representa- 
tions of  an  agent  as  to  the  extent  to  which  a  ticket  purchased 
by  him  was  good  for  passage.     It  seems  that  the  ticket  on  its 
face  was  a  little  uncertain.     It   was   not   controverted   that   the 
purchaser  had  read  the  ticket.     Being  uncertain  as  to  what  its  lan- 
guage meant,  he  applied  to  the  agent  for  an  explanation,  and  was 
informed  that  it  was  good  for  a  passage  to  the  point  to  which  the 
purchaser  desired  to  go,  and  to  which  he  had  paid  the  fare.     The 
conductor  refused  to  carry  him  to  that  point,  and  required  him  to 
pay  an  additional  fare  for  a  portion  of  the  distance.     The  authori- 
ties agree  that  the  purchaser  of  a  ticket,  or  a  contractor  for  carriage, 
in  order  to  be  bound  by  a  limitation,  must  have  knowledge  of  it, 
but  there  is  a  disagreement  among  them  as  to  what  amounts  to 
notice,  and  as  to  the  extent  of  the  duty  of  a  person  contracting 
for  carriage  to  carefully  examine  all  of  the  stipulations  written  or 
printed  in  the  contract.^ 

2  A  verdict  for  the  plaintiff  having  been  set  aside  by  the  court  below,  that 
order  was  reversed  and  set  aside,  and  the  case  remanded  for  the  rendition 
of  judgment  on  the  verdict. —  Ed. 


RIGHT    TO    MAKE   RULES    FOR   SERVICE,  175 


CHENEY  V.  BOSTON  &  MAINE  KAILEOAD  CO. 

11  Met.   121.     IMQ} 

Dewey,  J.  This  case  involves  no  question  of  the  general  duty 
of  railroad  companies  to  carry  passengers  who  offer  themselves  and 
are  ready  to  pay  the  usual  rate  of  fare.  It  is  only  a  question 
whether  one  who  purchases  a  ticket,  entitling  him,  by  the  rules  of 
the  company  regulating  the  tariff  of  fares  to  a  continuous  passage 
through,  and  avails  himself  of  the  reduction  in  price  allowed  to 
such  passengers,  can  insist  upon  being  taken  up  as  a  way  passen- 
ger, at  such  stations  as  he  may  elect  to  stop  at,  he  having  volun- 
tarily abandoned  the  train  that  went  through. 
,  The  question  really  is,  what  was  the  contract  between  the  plaintiff 
and  defendants.  Now  the  case  stated  by  the  parties  expressly  finds 
that  the  price  of  tickets  entitling  the  party  to  a  passage  in  the 
cars  from  Durham  to  Boston,  in  one  continuous  passage,  was 
$1.87l^  for  each,  and  for  a  passage  from  Durham  to  Exeter,  and 
from  Exeter  to  Boston,  as  separate  trips,  $2.  Such  was  the  regu- 
lar and  ordinary  charge.  It  is  true  that  the  tickets  themselves  do 
not  describe  the  passage  to  be  one  by  the  same  train.  Nor  do  they 
purport  to  entitle  the  holder  to  a  conveyance  by  two  separate  trips, 
first  by  taking  the  cars  to  Exeter,  and  thence  by  a  subsequent  train 
passing  from  Exeter  to  Boston.  They  are  silent  as  to  the  mode. 
It  therefore  was  a  contract  to  carry  in  the  usual  manner  in  which 
passengers  are  carried  who  have  tickets  of  that  kind. 

It  is  said  that  the  rules  of  the  company  were  unknown  to  the 
plaintiff  when  he  purchased  the  tickets,  and  therefore  he  ought  not 
to  be  affected  by  them.  This  might  very  properly  be  insisted  upon 
ill  his  behalf,  if  it  were  attempted  to  charge  him  with  any  liability 
created  by  such  rules;  especially  if  it  were  attempted  to  enforce 
any  claim  for  damages  by  reason  of  them. 

The  question,  as  to  the  right  of  the  plaintiff  to  be  transported 
as  a  passenger,  does  not  depend  upon  his  knowledge,  at  the  time 
of  the  purchase  of  his  ticket,  of  the  difference  of  the  price  to  be 
paid  for  a  passage  through  the  whole  distance  by  one  train,-  or  that 
of  a  passage  by  different  trains.  The  plaintiff  might  have  inquired 
and  informed  himself  as  to  that.  If  he  did  not,  he  took  the  mode 
of  conveyance,  the  price  of  the  ticket,  and  the  superscription 
thereon,  secure  to  him  under  the  rules  and  regulations  of  the  com- 
pany.    It  appears,  however,  that  before  reaching  Exeter,  the  plain- 

1  The  statement  of  facts  is  omitted,  the  facts  sufficiently  appearing  in  the 
opinion. —  Ed. 


176  RIGHT  TO   MAKE   RULES   FOR   SERVICE.         [CHAP.    III. 

jtiff  was  fully  apprised  of  the  different  rates  of  fare,  and  the  rules 
applicable  to  way  passengers,  and  that  the  agent  of  the  defendants, 
the  conductor  of  the  train,  offered  to  refund  to  him  the  money  that 
he  had  paid  for  his  tickets,  deducting  the  usual  fare  from  Durham 
to  Exeter,  which  the  plaintiff  refused  to  accept.  In  the  opinion  of 
the  court,  this  was  all  that  the  defendants  were  required  to  do; 
and  as  the  plaintiff  declined  this  offer,  and  thereupon  left  the  train, 
stopping  at  Exeter,  he  voluntarily  relinquished  his  passage  through 
by  a  continuous  train,  for  which  he  held  a  ticket,  and  whatever 
loss  he  has  sustained  was  occasioned  by  his  own  act,  and  occurred 
under  such  circumstances  as  preclude  him  from  all  claim  for  dam- 
ages for  any  default  in  the  company  in  the  matter.  Nor  can  he 
sustain  any  legal  claim  to  recover  back  the  sum  paid  for  ^lis  first 
ticket,  or  any  part  thereof.  The  offer  to  that  effect  was  refused  by 
him. 

Judgment  for  the  defendants.^ 


LAKE  SHOEE  AND  MICHIGAN  SOUTHERN  RAILWAY 
CO.  V.   GREENWOOD. 

79  Pa.  St.  373.     1875.^ 

October  20th,  1875.  Before  Agnew,  C.  J.,  Sharswood,  Wil- 
liams, Mercur,  Gordon,  Paxson  and  Woodward,  JJ. 

Error  to  the  Court  of  Common  Pleas  of  Erie  county :  Of  Octo- 
ber and  November  Term  1875,  No.  135. 

This  action  was  in  case  and  was  brought  November  23d,  1873,' 

by  J.  L.  Greenwood  and  Sarah  E.,  his  wife,  in  her  right,  against 

The  Lake  Shore  and  Michigan  Southern  Railway  Company.     The. 

I  cause  of  action  was  removing  Mrs.  Greenwood  from  one  of  the  way 

freight  train  cars  of  the  plaintiff  at  a  distance  from  a  station,  be- 

2  See  Johnson  v.  Concord  R.  R.  Corp.  (18G5),  46  N.  H.  213;  Western 
U.  T.  Co.  V.  Neel  (1894),  86  Tex.  368;  Western  U.  T.  Co.  v.  McMillan 
(1895)^30  S.  W.  (Tex.)  298;  Gulf,  C.  &  S.  F.  Ry.  Co.  v.  Moodv  (1895). 
30  S.  W.  (Tex.)  574;  Knoxville  Traction  Co.  v.  Wilkerson  (1906),  117 
Tenn.  482;  Florida  K.  C.  Ry.  Co.  v.  Carter  (1914),  65  So.  (Fla.)  254; 
McRea  v.  Railroad  Co.  (1883),  88  N.  C.  526;  Dietrich  v.  Pa.  R.  R.  Co. 
(1872),  71  Pa.  St.  432. 

As  to  waiver  of  regulation,  see  Pickford  v.  Grand  Junction  Ry.  Co. 
(1884),  12  M.  &  W.  765;  Greenfield  v.  Detroit  &  M.  Ry.  Co.  (1903),  133 
Mich.  557;  Missouri  K.  &  T.  Ry.  Co.  v.  Herring  (1910),  130  S.  W.  (Tex.) 
1039. 

With  regard  to  breaches  of  regulations  as  affecting  right  of  recovery  for 
injury,  see  Macon  &  W.  R.  R.  Cx).  v.  Johnson  (1868),  38  Ga.  409;  Balti- 
more Ry.  Co.  V.  Wilkinson  (1868),  30  Md.  224;  Renaud  v.  N.  Y.,  N.  H.  & 
H.  R.  R.  Co.  (1912),  210  Mass.  .5.^)3;  Coburn  v.  Ry.  Co.  (1910).  243  111.  448. 

As  to  liability  in  deceit  for  publishing  false  time-tables,  see  Denton  v. 
Great  N.  Ry.  Co.  (1856),  5  El.  &  Bl.  860. 

1  The  arguments  of  counsel  are  omitted. —  Ed. 


EIGHT    TO    MAKE   RULES    FOR   SERVICE.  IT 7 

cause  she  had  no  ticket,  although  she  offered  to  pay  the  conductor 
the  proper  fare.  She  was  removed  under  the  following  rule  of 
the  company :  — 

"  Notice. —  On  and  after  February  1st,  1873,  passengers  will 
not  be  carried  under  any  circumstances  upon  any  freight  trains, 
except  such  as  are  designated  as  way  freights  upon  the  time  tables, 
and  they  will  not  be  carried  upon  way  trains  unless  they  are  pro- 
vided with  tickets.  Way  freights  will  not  stop  at  the  stations  where 
tickets  are  not  sold  to  receive  nor  to  let  off  passengers." 

On  the  trial  before  Vincent,  P.  J.,  April  16th,  1875,  Mrs.  Green- 
wood testified  that  in  August,  1873,  she  started  from  Erie  to  go 
to  Harborcreek  Station,  seven  miles  east  of  Erie,  on  the  defend- 
ants' road;  she  had  missed  the  early  passenger  train  and  got  on 
the  way  freight  train;  no  one  came  around  till  she  had  got  about 
two  miles;  the  conductor  then  came;  she  offered  him  money,  he 
declined  to  take  it  and  asked  for  her  ticket ;  she  said  she  had  none ; 
he  said  he  must  put  her  off,  he  could  not  help  it;  he  was  obliged 
to  put  her  off  if  she  had  no  ticket;  she  had  been  accustomed  to 
ride  on  that  train  back  and  forward,  and  always  had  paid  her  fare 
on  the  train;  had  ridden  on  it  frequently  after  February  1st,  1873. 
She  did  not  see  the  notice  that  passengers  should  not  be  carried  on 
a  freight  train  without  a  ticket. 

Mr.  Greenwood  testified  that  he  went  with  his  wife  to  the  depot, 
the  ticket  agent  said  the  passenger  train  had  gone,  but  the  way 
freight  was  just  going,  starting  from  the  upper  end  of  the  depot; 
he  put  his  wife  aboard  there;  the  ticket  agent  did  not  say  he 
needed  a  ticket ;  he  had  often  ridden  on  the  train  without  a  ticket, 
did  not  know  a  ticket  was  required;  he  had  not  seen  the  notice  in 
the  depot  that  passengers  would  not  be  carried  on  freight  trains 
without  a  ticket. 

Plaintiff  gave  in  evidence  the  following  order  from  the  company 
to  their  employees :  — 

"  Conductors  of  way  freight  trains  must  visit  their  cabooses  im- 
mediately before  starting  from  each  station,  and  not  permit  any 
passengers  to  ride  upon  their  trains  except  such  as  are  provided 
with  tickets.  .  .  .  Ticket  agents  will  take  pains  to  inform  passen- 
gers of  this  order,  so  that  the  public  may  experience  no  inconven- 
ience." 

Defendants  gave  evidence  that  the  notice  was  hung  in  conspicu- 
ous places  in'  the  ladies'  and  gentlemen's  rooms  in  the  passenger 
station  at  Erie,  and  had  been  put  up  a  week  or  ten  days  before 
the  order  took  effect;  the  notice  was  in  the  caboose  when  Mrs. 
Greenwood  got  on  the  train ;  the  notice  was  in  each  of  the  waiting- 
rooms  at  Harborcreek  Station. 


178  RIGHT   TO    MAKE    RULES   EOR   SERVICE.  [CHAP.    III. 

The  court  charged :  — 

..."  It  has  not  been  contended  that  the  order,  requiring  all 
passengers  on  this  train  to  procure  tickets  before  getting  upon  the 
train,  was  not  a  reasonable  and  proper  one,  and  within  the  power 
of  the  defendants  to  make.  But  she  contends  that  the  company- 
had,  before  this,  for  a  long  time,  been  in  the  habit  of  carrying  her, 
back  and  forth,  between  Erie  and  Harborcreek,  and  allowing  her 
to  pay  her  fare  on  the  cars,  and  she  had  never  seen  a  notice  or  been 
informed  of  the  new  rule ;  and  her  husband  testifies  that,  although 
the  ticket  agent  at  Erie  told  him  he  could  take  this  way  freight, 
he  did  not  inform  him  that  he  must  procure  a  ticket  for  his  wife 
or  himself  before  getting  into  the  car,  and  that  he  was,  therefore, 
justified  in  getting  on  the  car  without  a  ticket,  and  that  the  con- 
ductor should  have  received  her  fare,  and  carried  her  to  her  destina- 
tion. "VVe  are  of  the  opinion  that,  if  the  company  had  been  in  the 
habit  of  carrying  the  plaintiff  on  this  train  without  a  ticket,  its 
agents  had  no  right  to  eject  her  from  the  car,  unless  she  had  notice 
of  the  change  of  the  rule.  It  matters  not  how  she  had  that  notice, 
if  she  did  have  it  before  she  went  upon  the  train,  the  conductor 
hadJa  right  to  put  her  off,  using  as  much  force  as  was  necessary  for 
that  purpose,  and  putting  her  off  in  a  reasonably  proper 
place."  .  .  . 

Both  parties  submitted  points.  The  foregoing  portion  of  the 
charge  sufficiently  states  the  principles  involved  in  them  and  the 
question  decided  by  the  Supreme  Court. 

The  verdict  was  for  the  plaintiffs  $125. 

The  defendants  took  a  writ  of  error,  and  assigned  for  error  the 
instruction  of  the  court. 

Judgment  was  entered  in  the  Supreme  Court,  November  1st, 
1875. 

Per  Curiam. —  The  rule  as  to  the  purchase  of  tickets  before  en- 
tering into  the  car  of  the  way  freight  train  was  entirely  reason- 
able. But  the  plaintiff  having  used  this  car  often  before  the  adop- 
tion of  the  rule,  and  indeed  afterwards,  without  objection  for  the 
want  of  a  ticket,  the  company  could  not  turn  her  out  of  the  car  and 
land  her  off  a  mile  or  so  from  the  station  without  proof  of  express  no- 
tice, or  her  actual  knowledge  of  the  existence  of  the  rule  forbidding 
any  one  to  enter  the  car  v/ithout  a  ticket.  The  putting  up  such 
notices  in  the  station  house  is  not  sufficient  under  these  circum- 
stances to  visit  her  with  notice. 

Judgment  affirmed.'^ 

2  Compare  .Tohnson  v.  Concord  R.  R.  Corp.  (186.5),  4fi  N.  H.  213;  Sears  v. 
R.  R.  Co.  (l.S(;7),  14  Allen.  4,33;  Lane  v.  R.  R.  Co.  (1880).  .5  Lea  (Tenn.), 
124;  Van  Camp  v.  Mich.  Cent.  R.  R.  Co.  (1904),  137  Mich.  467;  Geer  v. 
R.  R.  Co.   (1905),  142  Mich.  511. 


EIGHT   TO   MAKE  RULES   FOR   SERVICE.  179 


LOUISVILLE  AND  NASHVILLE  RAILROAD  v.  TURNER. 

100  Tenn.  213.     1897> 

Wilkes,  J.  This  is  an  action  for  damages  for  unlawfully  eject- 
ing the  plaintiff.  Turner,  from  one  of  the  passenger  cars  of  the 
Louisville  &  Nashville  Railroad  Company.  It  was  commenced  be- 
fore a  justice  of  the  peace,  and  on  appeal  was  tried  before  the 
court  and  a  jury,  and  judgment  rendered  for  the  plaintiff  for  $300 
and  costs;  and  the  railroad  company  has  appealed  and  assigned 
errors. 

The   facts   are   that  plaintiff  bought  what .  is   called   a   "  local 
ticket "  at  Guthrie,  Ky.,  for  Clarksville,  Tenn.     Upon  its  face  was 
stamped  or  printed  the  words,  "  Good  for  one  continuous  passage, 
beginning  on  date  of  sale,  only."     And  the  date  of  sale,  "  June 
14/97,"  was  stamped  on  its  back.     Plaintiff  did  not  use  or  attempt 
to  use  the  ticket  upon  the  day  of  sale,  being  unexpectedly  detained 
at  Guthrie  on  business.     On  the  next  day  he  tendered  the  ticket 
for  passage  to  Clarksville.     The  conductor  took  the  ticket  in  his 
hand  and  punched  it,  and  handed  it  back  to  plaintiff,  with  the  re- 
mark that  he  could  not  ride  upon  it,  that  the  rule  of  the  company 
was  that  such  ticket  was  good  only  on  the  day  of  sale,  and  that  he 
would  have  to  pay  fare  or  get  off  the  train.     Plaintiff  replied  that 
he  had  bought  the  ticket  and  paid  full  price  for  it,  and  was  entitled 
to  ride  upon  it,  and  had  no  notice  of  such  rule;  that  he  had  no 
money  to  pay  his  fare,  and  would  not  willingly  leave  the  train,  but 
would  have  to  be  put  off.     At  the  nex-t  station  the  conductor  took 
him  by  the  arm  and  led  him  through  the  car,  and  put  him  off,  with- 
out any  actual  force  or  rudeness.     He  walked  down  the  railroad 
three  or  four  miles,  and,  finding  a  conveyance  going  to  Clarksville, 
went  in  it,  reaching  that  city  without  further  cost  about  4  o'clock 
P.M.,  when  by  the  train  he  would  have  reached  there  at  11  a.m. 
of  the  same  day.     Plaintiff  states  that  he  had  no  knowledge  of  the 
regulation  of  the  road  that  a  ticket  must  be  used  on  the  date  of 
its  sale,  and  had  previously  ridden  upon  tickets  on  days  subsequent 
to  the  day  of  sale.     It  appears  that  about  January  1,  1897,  the  rail- 
road company  had  put  this  rule  in  force,  and  had  posted  notices 
of  it  in  its  various  waiting  rooms,  and  among  others  one  was  posted 
near  the  ticket  window  at  Guthrie.     This  notice  was  as  follows: 
"  Louisville  &  Nashville  R.  R.  Co.     Notice.     On  and  after  Jan. 
1,  1897,  local  tickets  sold  by  this  company,  except  commutation  and 

1  A   small   part   of   the  opinion  dealing  with   the   measure  of  damages  is 
omitted. — Ed. 


180  EIGHT    TO    MAKE    RULES    FOR    SERVICE.  [CHAP.    III. 

mileage  tickets,  will  be  void  if  not  used  for  continuous  passage 
through  to  destination,  beginning  on  date  of  sale.  Any  ticket 
which  cannot  be  thus  used  will  be  redeemed  from  the  original  pur- 
chaser, if  sent  to  the  general  passenger  agent,  at  Louisville,  Ky., 
with  satisfactory  explanation  of  the  cause  which  prevented  its  use." 
Signed  by  the  traffic  manager  and  general  passenger  agent.  This 
notice  was  thus  posted  continuously  from  the  date  it  went  into 
effect,  about  January  1,  1897,  up  to  the  date  of  trial ;  and  all  local 
tickets  sold  after  January  1,  1897,  had  stamped  or  printed  on  their 
face  the  provision  above  stated, — "  Good  for  one  continuous  pas- 
sage, beginning  on  date  of  sale,  only."  It  is  not  shown  that  any 
special  damage  was  done  the  plaintiff,  beyond  the  indignity  of 
ejecting  him  from  the  train,  and  the  inconvenience  to  which  he  was 
put  on  his  journey.  Many  errors  are  assigned,  but  we  will  not  treat 
them  seriatim. 

The  court  charged  the  jury,  in  substance,  that  such  a  regulation 
and  limitation  in  regard  to  tickets  as  the  one  in  controversy  would 
not  be  binding  on  a  purchaser,  unless  the  contents  and  conditions 
were  made  known  to  him  when  he  bought  the  ticket,  or  it  be  shown 
otherwise  that  he  knew  of  them,  and  purchased  the  ticket  with  that 
knowledge;  that,  in  order  to  charge  him  with  notice,  it  must  be 
shown  that  he  actually  knew  of  them  and  consented  to  them,  and 
the  railroad  company  would  be  liable,  if  he  bought  a  ticket  without 
such  actual  knowledge,  and  attempted  to  use  it,  and  was  ejected 
from  the  train;  that  the  fact  that  the  notice  was  posted  up  in  the 
waiting  room,  near  the  ticket  window,  and  that  the  limiting  words 
were  stamped  or  printed  on  the  face  of  the  ticket,  would  not  af- 
fect a  purchaser  with  notice,  if  he  bought  the  ticket  in  the  usual 
way,  and  paid  the  usual  price  for  it,  and,  if  ejected  for  the  refusal 
to  pay  fare  while  tendering  such  ticket,  the  road  would  be  liable. 
This  holding  and  riding  of  the  court  is  assigned  as  error,  and  it  is 
also  assigned  as  error  that  there  is  no  evidence  to  support  the  ver- 
dict, and  that  the  damages  are  excessive.  It  is  held  by  this  court 
that  a  railroad  company  may  make,  and  by  its  agents  enforce,  rea- 
sonable rules  and  regulations  for  the  carriage  of  freight  and  pas- 
sengers, and  the  transaction  of  its  business  generally.  Summit  v. 
State,  8  Lea,  413 ;  Lane  v.  Railroad  Co.,  5  Lea,  126 ;  Eailroad  Co.  v. 
Garrett,  8  Lea,  438 ;  Eailroad  Co.  v.  Fleming,  14  Lea,  129 ; 
Eailroad  Co.  v.  Benson,  1  Pickle  627.  As  to  whether  a  rule  is 
reasonable  or  not  is  a  question  for  the  court.  Eailroad  Co.  v. 
Fleming,  14  Lea,  128.  But  such  rules  and  regulations  must 
be  reasonable  in  their  requirements,  and  must  be  executed  in 
a  reasonable  and  proper  manner,  so  as  not  to  be  unnecessarily 
burdensome    to    the    public.     Such    rules    must    not    contravene 


RIGHT    TO    MAKE    RULES    FOR    SERVICE.  181 

any   law   or   principle   of    sound   public    policy,    and   they   must 
accord  with  the  proper  service  and  conduct  of  a  railroad  in  its 
business   and   duty   as   a  common   carrier.     The   liability   of  the 
road  cannot  be  restricted  by  such  rules  and  regulations,  nor  can 
they  be  so  shaped  or  enforced  as  unnecessarily  to  annoy  and  restrict 
the  traveling  public  in  its  rights.     5  Am.  &  Eng.  Enc.  Law  (2d 
Ed.)  p.  482,  and  notes.     Thus,  in  Lane  v.  Eailroad  Co.,  5  Lea,  124, 
it  was  held  that  a  railroad  company  has  the  right  to  make  regula- 
tions requiring  passengers  to  purchase  tickets  before  entering  upon 
a  freight  train,  and  authorizing  conductors  to  expel  persons  not 
having  tickets,  though  they  offer  money  in  payment  of  fare.     In 
Summit  v.  State  it  is  held  that  a  railroad  may  make  all  necessary 
reasonable  rules  for  the  proper  and  orderly  management  of  its  de- 
pots and  other  places  open  to  the  public,  but  not  in  such  way  as 
to  infringe  upon  the  rights  of  the  public.     A  railroad  may  also 
make  a  rule  that  coupons  from  tickets  shall  be  detached  only  by 
the  conductor,  and  not  by  the  passenger,  and  enforce  such  rule 
in  a  reasonable  manner.     Railroad  Co.  v.  Harris,  9  Lea,  180.     So 
a  railroad  may  by  regulation  establish  a  higher  rate  of  fare  if  paid 
on  the  cars  than  in  the  case  of  a  ticket  purchased  before  going  on 
the  train.     Eailroad  Co.  v.  Guinan,  11  Lea,  98.     It  may  also  regu- 
late the  running  of  its  trains,  and  the  stopping  of  through  trains 
at  principal  points  only,  and  require  passengers  who  are  destined 
to  way  stations  to  ride  upon  such  trains  only  as  under  the  schedules 
stop  at  such  stations.     Trotlinger  v.  The  E.  T.  &  Ga.  R,  E.,  11  Lea, 
533,     It  may  also  require  a  person,  on  entering  a  train  for  pur- 
poses of  travel,  to  exhibit  his  ticket,  and  afterwards  to  surrender  it 
when  called  upon  by  the  conductor.     Eailroad  Co.  v.  Fleming,  14 
Lea,  129.     It  may  also  prescribe  in  what  cars  passengers  may  ride, 
provided  equal  and  proper  accommodations  are  furnished  alike  to 
all  passengers  holding  first-class  tickets,  as  that  cars  may  be  set 
apart  for  ladies  when  alone  or  accompanied  by  gentlemen  traveling 
with  them,  and  different  cars  for  colored  and  white  people  shall  be 
furnished,  under  the  statute.     Eailroad  Co.  v.  Benson,  1  Pickle, 
627;  Eailroad  Co.  v.  Wells,  1  Pickle,  613.     Such  rules  and  regiila- 
tions,  in  order  to  be  effective,  must  be  made  known  to  the  public  in 
such  way  and  by  such  means  as  in  the  special  case  may  be  neces- 
sary and  best  adapted  to  serve  the  convenience  and  purpose  of  the 
passenger  as  well  as  of  the  railroad. 

As  to  what  notice  or  publication  of  rules  is  required  or  sufficient, 
in  order  to  reach  and  affect  the  public,  the  authorities  are  by  no 
means  agreed.  From  the  very  nature  of  the  case,  much  must  de- 
pend upon  the  provisions  of  the  rule,  and  whether  it  is  one  intended 
to  affect  the  entire  public  and  the  usual  and  general  business  of 


182  RIGHT   TO    MAKE   RULES    FOR   SERVICE.  [CHAP.    III. 

passenger  traffic  or  one  intended  for  certain  trains  and  certain  cir- 
cumstances and  individuals  only.  To  illustrate,  a  person  desir- 
ing to  ride  upon  a  freight  train,  or  a  through  train  when  his  des- 
tination is  a  way  station,  would  reasonably  expect  regulations  dif- 
ferent from  those  affecting  travel  generally,  and  would  be  put  on 
his  guard  to  ascertain  the  rules  by  which  his  passage  must  be  gov- 
erned, when  he  would  have  no  occasion  to  suspect  such  rules  to 
apply  to  his  passage  upon  the  trains  of  the  road  generally.  A  rule 
relating  to  the  former  might  be  reasonable,  which  would  not  in 
the  latter  case,  and  notice  might  be  sufficient  in  the  former  which 
would  not  be  in  the  latter. 

So,  in  Lane  v.  Eailroad,  5  Lea,  124,  it  was  held  that  when  a  rail- 
road company  has  been  in  the  habit  of  permitting  persons  to  ride 
upon  its  freight  trains  without  the  purchase  of  tickets,  it  must  in- 
form persons  personally  that  its  rule  has  been  changed  so  as  to 
require  tickets,  if  such  is  the  case,  until  such  time  as  will  suffice 
to  acquaint  the  public  with  the  existence  of  such  rule. 

So,  in  Trotlinger  v.  Eailroad,  11  Lea,  533,  it  was  held  that  a 
passenger  holding  a  ticket  to  a  way  station  had  no  right  to  ride 
upon  a  through  train  which  did  not  stop  at  such  station,  provided 
.he  had  notice  of  such  schedule  regulations,  and  it  was  suggested 
that  if  such  publicity  had  been  given  in  the  ticket  office  and  on 
the  cars  by  posters  that  a  party  of  ordinary  intelligence,  by  the  use 
of  ordinary  care  and  caution,  could  or  might  obtain  all  requisite 
information  as  to  the  matters  involved,  then  the  passenger  would 
be  bound  by  such  regulations.  Citing  2  Wait's  Actions  and  De- 
fenses, 67,  and  cases  there  collated,  for  authority  for  the  latter 
proposition  as  to  publication  and  notice. 

These  regulations  in  regard  to  riding  on  freight  trains,  and  on 
trains  only  that  stop  at  certain  stations  and  do  not  stop  at  others, 
have  been  held  to  be  reasonable  regulations,  but  they  apply  to  only 
exceptional  cases,  and  not  to  the  general  traveling  public  in  passing 
over  the  road  from  one  station  to  another.  Such  special  cases  may 
be  regulated  by  rules,  and  such  rules  may  very  properly  be  brought 
to  the  knowledge  of  the  traveling  public  by  notices  of  publication, 
but  a  rule  and  notice  which  is  intended  to  apply  to  all  passengers, 
and  to  affect  all' travel  and  every  individual  who  applies  for  pas- 
sage, stands  upon  a  different  basis  and  requires  more  direct  notice. 
A  notice  which  is  intended  to  apply  to  the  entire  public  should  be 
such  as  to  leave  no  doubt  but  that  it  reaches  all  who  are  to  be  af- 
fected by  it. 

.  While  there  is  a  conflict  in  the  cases,  the  weight  of  authority  is 
that  time  limitations,  or  conditions  stamped  or  printed  upon  the 
back  or  face  of  a  general  ticket,  are  not  binding  upon  a  passenger 


EIGHT    TO    MAKE    RULES    FOR   SERVICE.  183 

unless  his  attention  is  called  to  them  when  he  purchases  the  ticket 
and  he  assents  thereto.  Potter  v.  The  Majestic,  23  L.  E.  A.,  746, 
and  note;  Eay's  Negligence  of  Imposed  Duties  of  Passenger  Car- 
riers, 514,  518;  4  Elliott  on  Eailroads,  Sec.  1593,  note;  Cole  v. 
Goodwin,  33  Am.  Dec,  505,  and  notes;  Eawson  v.  Penn.  Eailroad 
Co.,  8  Am.  Dec,  545. 

While  there  may  be  some  uncertainty,  and  even  conflict,  in  the 
authorities,  we  are  of  the  opinion  that  the  correct  rule  is  that  a 
person  who  purchases  a  general  ticket,  and  pa3's  the  usual  price 
therefor,  is  entitled  to  one  passage,  unlimited  as  to  time,  upon 
any  train  which,  under  the  proper  and  usual  schedules  of  the  road, 
stops  at  the  point  of  the  passenger's  destination.  If  a  ticket,  lim- 
ited or  conditional,  is  sold  to  a  passenger,  it  can  only  be  done  upon 
an  express  agreement  with  him,  either  oral  or  in  writing,  and 
either  based  upon  a  consideration,  or  with  the  alternative  presented 
to  the  passenger  of  a  full  and  unlimited  ticket.  A  similar  rule  ob- 
tains in  regard  to  contracts  for  carriage  of  freight,  and  it  has  been 
held  by  this  Court  that  a  carrier  must  hold  itself  in  readiness  to 
ship  with  common  law  liabilit}^  and  must  offer  to  shippers  a  rea- 
sonable and  bona  fide  alternative  between  that  mode  of  shipment 
and  one  with  restricted  or  limited  liability.  Eailroad  v.  Gilbert, 
Parkes  &  Co.,  4  Pickle,  430. 

So,  in  Michigan  Central  Eailroad  v.  Mineral  Springs  Mfg.  Co., 
16  Wall.,  330  (Book  21,  L.  Co-op.  Ed.,  302),  it  is  said:  "  Nothing 
short  of  an  express  stipulation,  by  parol  or  in  writing,  will  be  per- 
mitted to  discharge  a  carrier  from  the  duties  which  the  law  has 
annexed  to  his  employment,  .  .  .  and  such  agreement  is  not  to  be 
implied  or  inferred  from  a  general  notice  to  the  public  limiting 
the  obligation  of  the  carrier,  which  may,  or  may  not,  be  assented 
to."     See,  also,  Nav.  Co.  v.  Black,  6  How.,  344. 

We  are  also  of  opinion  that  the  mere  stamping  or  printing  of  a 
limitation  or  condition  upon  the  back  or  face  of  a  ticket,  and  the 
acceptance  of  such  ticket  by  a  passenger,  without  more,  is  not  suf- 
ficient to  bind  him  to  such  condition  or  limitation,  in  the  absence 
of  actual  notice  to  him  of  such  condition  or  limitation  and  his  as- 
sent thereto  when  he  purchases  his  ticket.  It  cannot  be  presumed 
that  every  person  buying  a  railroad  ticket,  for  ordinary  and  gen- 
eral use,  will,  in  the  hurry  and  bustle  of  travel,  stop  to  read  and 
critically  inspect  his  ticket.  As  a  matter  of  fact,  but  little  oppor- 
tunity is  afforded  him  to  do  so.  He  generally  takes  his  place  in 
the  crowd  at  the  ticket  window,  produces  and  hands  over  his  money 
with  a  request  for  a  ticket  to  destination.  His  money  is  received. 
The  ticket  is  produced,  and,  after  being  stamped,  is  handed  to  him 
through  the  ticket  window.     He  has  had  no  opportunity  to  see  what 


184  EIGHT   TO    MAKE   RULES    FOR   SERVICE.  [CHAP.    III. 

is  upon  it,  and  has  no  time,  in  the  rush,  to  stop  and  read  and  con- 
sider what  may  be  printed  or  stamped  on  its  face  or  back,  and  when 
he  has  paid  full  fare  there  is  no  occasion  for  his  doing  so,  inasmuch 
as  he  can  safely  rely  upon  the  contract  which  the  law  makes  for 
him.  Ordinary  local  tickets  do  not  generally  contdin  any  terms 
of  contract,  and  are  not  intended  to  do  so.  They  are  mere  tokens 
to  the  passenger  and  vouchers  for  the  conductor,  adopted  for  con- 
venience to  show  that  the  passenger  has  paid  his  fare  from  one 
place  to  another,  very  much  in  the  nature  of  baggage  checks.  The 
contract  is  in  fact  made  when  the  ticket  is  purchased,  and  if  it  is 
different  from  what  the  law  would  imply,  it  must  be  so  stated  and 
assented  to  when  the  ticket  is  delivered.  Nor  will  the  posting  of 
notices  in  the  waiting  rooms,  ticket  offices,  and  on  the  cars  affect 
purchasers  with  notice  in  such  cases.  Passengers  have  but  little 
time  or  opportunity  to  read  such  placards,  and  it  would  impose 
quite  a  serious  burden  upon  travel  to  hold  that  the  public  must 
read  all  these  notices  thus  posted,  before  taking  passage  on  a  train 
upon  which  they  are  willing  to,  and  do,  pay  full  fare.  Eawson  v. 
Penn.  E.  E.  Co.,  8  Am.  Eep.,  545;  Cole  v.  Goodwin,  32  Am.  Dec, 
505,  and  note;  Eay  Passenger  Carriers,  Sec.  145;  Hutchinson  on 
Carriers,  Sees.  246,  580,  581 ;  4  Elliott  on  Eailways,  Sec.  1593. 

This  rule,  which  we  consider  to  be  settled  by  the  weight  of  au- 
thority and  by  reason,  by  no  means  prevents  a  railroad  company 
from  selling  special  tickets  for  special  trains  with  limitations  and 
conditions,  such  as  excursion,  round-trip,  commutation,  and  mileage 
tickets,  when  the  conditions  and  limitations  are  known  to  the  pur- 
chaser and  assented  to  by  him  orally  or  in  writing,  and  he  has  paid 
for  such  ticket  less  than  the  usual  fare.  When  tickets  are  sold  at 
reduced  rates,  it  has  been  very  wisely  said  that  the  purchaser  should, 
in  consideration  of  such  reduced  fare  or  greater  privileges,  expect 
and  look  for  some  conditions,  limitations,  and  terms  different  from 
those  attaching  to  tickets  generally,  and  be  on  his  guard  to  become 
informed  of  them.  But  there  is  no  such  obligation  upon  the  ordi- 
nary passenger,  who  pays  the  usual  or  full  fare  and  asks  for  no 
reduced  rates  or  special  privileges,  and  he  has  a  right  to  expect  an 
unlimited  ticket.^ 

2  Compare  McRea  v.  Wilmington  &  W.  R.  R.  Co.  (1883),  88  N.  C.  52G. 


EIGHT    TO    MAKE   RULES    FOR   SERVICE.  1S5 

MARONY  V.  OLD  COLONY  &  NEWPORT  RAILROAD  CO. 

106  Mass.  153.     1870.^ 

The  plaintiff  bought  a  ticket  for  passage  from  Sandwich,  Massa- 
chusetts, to  New  York.  It  was  also  in  evidence,  that  he  took  the 
morning  train  on  the  Cape  Cod  Railroad,  giving  the  conductor  for 
his  passage  the  first  part  of  the  ticket,  and  arrived  at  Middlebor- 
ough,  the  point  of  junction  with  the  old  line  of  the  Old  Colony  & 
Newport  Railroad,  about  nine  o'clock,  and  there  entered  a  train 
of  the  defendants'  cars,  and  was  carried  to  Fall  River,  the  con- 
ductor of  this  train,  to  whom  he  presented  this  ticket,  punching 
the  same,  and  allowing  him  to  pass  thereon;  that  at  Fall  River, 
after  a  short  delay,  he  entered  another  train  of  the  defendants' 
cars,  being  the  morning  train  from  Boston  to  Newport,  which  came 
to  Fall  River  by  way  of  Taunton,  and  not  by  way  of  Middleborough  ; 
and  that  between  Fall  River  and  Tiverton,  being  called  upon  for 
his  fare  by  the  conductor  of  tlie  last  named  train,  he  presented 
the  ticket,  and  was  informed  by  the  conductor  that  by  the  rules 
of  the  defendants  it  was  good  only  on  the  steamboat  trains,  or 
trains  connecting  with  the  steamboats,  of  which  two  were  run  in 
the  afternoon,  and  that  he  must  pay  the  difference  in  fare  (about 
sixty  cents)  or  leave  the  train  at  Tiverton,  the  next  station,  and  wait 
for  the  steamboat  train,  which  passed  in  the  afternoon;  that  the 
plaintiff  refused  to  make  any  further  payment,  claiming  that  on 
said  ticket  he  was  entitled  to  ride  to  Newport  on  said  train,  pass 
a  part  of  the  day  in  Newport,  and  then  take  the  steamboat  in  the 
evening  for  New  York;  that  at  Tiverton  he  was  removed,  or  re- 
quired to  leave  the  train,  by  the  conductor;  and  that  he  subse- 
quently jumped  upon  the  train,  rode  to  the  next  station,  Bristol 
Ferry,  there  left  the  train,  and  some  six  or  seven  hours  later  took 
the  steamboat  train  at  Bristol  Ferry,  and  reached  Newport  before 
the  departure  of  the  steamboat  for  New  York ;  that  the  fare  at  this 
time,  by  reason  of  competition  with  other  lines,  was  less  from  Sand- 
wich to  New  York  than  the  fare  from  Sandwich  to  Newport,  of 
which  the  plaintiff'  was  informed ;  that  the  tickets  in  the  form  above 
described  were  prepared  and  issued  by  the  Cape  Cod  Railroad  Com- 
pany, and  had  been  sold  for  some  months  prior  to  July  11,  1868, 
by  said  company,  with  the  assent  of  the  defendants,  but  the  Cape 
Cod  Railroad. Company  claimed  no  other  right  to  make  contracts 
for  conveyance  of  passengers  over  the  defendants'  railroad;  and 
that  of  the  amount  received  for  such  tickets  the  Cape  Cod  Railroad 

1  Part  of  the  statement  of  facts,  the  arguments  of  counsel  and  a  para- 
graph of  the  opinion  dealing  with  a  point  of  evidence  are  omitted. —  Ed. 


186  RIGPIT   TO    MAKE    RULES    FOR   SERVICE.  [CHAP.    III. 

Company  retained  the  local  fare  on  its  own  road,  and  paid  the  de- 
fendants the  amount  of  the  fare  from  Middleborough  to  New  York, 
and  the  ticket-seller  at  Sandwich  was  appointed  by,  accounted  to, 
and  received  all  instructions  from  said  Cape  Cod  Eailroad  Com- 
pany. 

I  The  defendants  offered  evidence,  which  was  uncontradicted,  that 
/by  their  rules  passengers  holding  tickets  to  New  York  were  re- 
/stricted  to  the  steamboat  trains:  that  two  steamboat  trains  were  run 
each  afternoon,  to  one  of  which  cars  passing  through  Middlebor- 
ough were  attached,  and  stopped  at  Tiverton ;  and  that  the  morning 
train  from  Boston  to  Newport  was  not  one  of  said  steamboat  trains. 
Wells,  J.  The  plaintiff's  ticket  entitled  him  to  a  passage  upon 
any  regular  train  for  passengers  upon  the  road  of  the  defendants. 
It  contained  no  notice  of  any  restriction  or  limitation  of  the  right 
which  it  purported  to  give.  It  was  issued  by  the  ticket  agent  of  the 
Cape  Cod  Eailroad  Company,  whose  authority  for  that  purpose 
was  sufficiently  shown  by  the  fact  that  such  tickets  had  been  so 
issued  by  said  company  "  for  some  months  prior  "  thereto,  "  with 
the  assent  of  the  defendants."  The  defendants  could  not,  by  any 
rule  or  regulation  not  previously  made  known,  restrict  the  plaintiff 
from  taking  the  passage  to  which  his  ticket  entitled  him,  in  any 
regular  train  for  the  accommodation  of  passengers.  Under  the  in- 
structions, the  jury  must  have  found  that  there  was  no  such  in- 
formation to  the  plaintiff  personally;  and  the  case  shows  no  such 
publication  of  the  rule  as  would  affect  him  with  notice  thereof. 

We  think  that  the  defendants  show  no  good  ground  of  exception 
to  the  ruling  or  the  instructions  to  the  jury  in  the  court  below. 

Exceptions  overruled.     • 


WEBBE  V.  WESTEEN  UNION"  TELEGEAPH  CO. 

169  111.  610.     1897.^ 

Mr.  Justice  Magruder  delivered  the  opinion  of  the  court. 

Upon  the  blank  form  containing  the  telegraphic  message  de- 
livered by  Haas  to  appellee's  operator  at  Montgomery,  Ala.,  there 
were  printed  in  small  type  certain  conditions,  among  which  was 
the  following :  "  The  company  will  not  hold  itself  liable  ...  in 
any  case  where  the  claim  is  not  presented  in  writing  within  sixty 
days  after  the  message  is  filed  with  the  company  for  transmission." 
Upon  the  back  of  the  blank  form  upon  which  the  dispatch  as  de- 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion 
are  omitted. —  Ed. 


EIGHT   TO    MAKE   RULES    FOR   SERVICE,  187 

Uvered  to  appellant  in  Chicago  was  written,  certain  stipulations  and 
conditions  were  printed,  the  last  of  which  was  as  follows :  "  The 
company  will  not  he  liable  for  damages  or  statutory  penalties  in  any 
case  where  the  claim  is  not  presented  in  writing  within  sixty  days 
after  the  message  is  filed  with  the  company  for  transmission."  It 
is  contended  by  appellee  that  the  claim  here  sued  upon  was  not  pre- 
sented in  writing  within  the  60  days  named  in  the  printed  conditions. 
It  is  not  altogether  clear,  under  the  evidence  in  this  case,  that  the 
claim  was  not  presented  in  writing  within  60  days,  as  required  by  the 
condition.  On  February  7,  1893,  one  of  the  attorneys  of  the  appel- 
lant wrote  a  letter  to  an  officer  of  the  appellee  company.  Although 
this  letter  stated  that  the  claim  for  damages  was  made  against  ap- 
pellee on  behalf  of  I.  H.  &  J.  C.  Haas,  yet  the  letter  explained  fully 
the  nature  of  the  alteration  which  was  made  in  the  dispatch,  and  the 
nature  of  the  claim  based  upon  the  loss  incurred  by  reason  of  that 
alteration.  But,  whether  the  claim  was  presented  in  writing  within 
the  60  days  or  not,  it  seems  to  be  conceded  that  the  action  of  the 
court  in  instructing  the  jury  to  find  for  the  defendant  was  based 
upon  the  conclusion  that  the  claim  was  not  presented  in  writing 
within  the  time  named. 

The  question  in  the  case  is  whether  the  court  erred  in  taking  the 
case  away  from  the  Jury.  The  further  question  involved  is  whether 
the  failure  to  present  the  claim  in  writing  within  the  60  days,  if 
there  was  such  failure,  constitutes  a  defense  against  the  present 
action.  It  is  not  denied  that  the  company  was  guilty  of  negligence 
in  delivering  the  dispatch  as  altered,  instead  of  delivering  it  as 
originally  sent.  At  any  rate,  no  contest  is  made  upon  the  ques- 
tion as  to  whether  there  was  such  negligence  or  not.  Counsel  for 
appellee  confine  themselves  in  their  brief  to  the  proposition  that, 
for  want  of  a  claim  in  writing  within  60  days  after  the  dispatch 
in  question  was  sent,  appellant's  right  of  recovery  is  barred.  It 
is  to  be  noted  that  this  suit  is  not  brought  by  Haas,  the  sender 
of  the  dispatch,  but  by  Webbe,  the  receiver  of  the  dispatch  as 
changed.  The  dispatch,  as  sent,  is  signed  by  the  sender;  but  the 
dispatch,  as  received,  is  not  signed  by  the  receiver.  The  question, 
then,  arises  whether  any  difference  exists  between  the  right  of 
recovery  by  the  sender  of  the  dispatch  and  the  right  of  recovery 
by  the  receiver  of  the  dispatch,  so  far^s  these  printed  conditions 
upon  the  blank  forms  are  concerned.  .We  have  held  that  the  rela- 
tion of  contract  exists  between  the  sender  of  the  dispatch  and  the 
telegraph  company,  but  that  no  relation  of  contract  exists  between 
the  receiver  of  the  dispatch  and  the  telegraph  company,  and  that 
the  proper  remedy  of  the  receiver  of  the  dispatch  for  damages  on 
account  of  its  alteration  is  an  action  in  tortj    Telegraph  Co.  v. 


) 

188  RIGHT    TO    MAKE   RULES    FOR   SERVICE.  [CHAP.    III. 

Dubois,  128,  111.  248.  Ordinarily,  where  a  shipper  of  goods  or 
the  sender  of  a  telegraphic  dispatch  is  held  to  be  bound  by  stipu- 
lations or  conditions  printed  upon  the  blank  form  of  a  receipt 
or  bill  of  lading  or  dispatch,  it  is  upon  the  ground  that  the  person 
so  bound  signs  the  document  containing  the  conditions,  and  makes 
a  contract  with  the  company  which  is  to  carry  his  goods  or  transmit 
his  message.  It  would  seem  to  be  clear,  however,  that  such  con- 
ditions and  stipulations  would  not  have  the  same  binding  effect 
where,  as  here,  no  contract  relation  exists. 

In  a  case  where  a  suit  in  assumpsit  for  damages  was  brought  by 
the  sender  of  a  dispatch  against  the  telegraph  company,  we  held 
that  the  telegraph  company  is  a  servant  of  the  public,  and  bound 
to  act  whenever  called  upon,  its  charges  being  paid  or  tendered; 
that  such  companies  are,  in  this  respect,  like  common  carriers,  and 
though  not  regarded,  like  common  carriers,  as  insurers  of  the  safe 
delivery  of  every  message  intrusted  to  them,  yet  their  duty  is  to 
transmit  correctly  the  message  as  delivered;  that  they  are  bound 
to  the  use  of  due  and  reasonable  care,  and  liable  for  the  conse- 
quences of  carelessness  or  negligence,  in  the  conduct  of  their  busi- 
ness; that  where  a  party  desiring  to  send  a  telegraphic  dispatch 
is  required  by  the  company  to  write  his  message  upon  a  paper  con- 
taining a  condition  exonerating  the  company  from  liability  for  an 
incorrect  transmission  of  the  message  unless  it  shall  be  repeated, 
and  at  an  additional  cost  therefor  to  the  sender,  such  a  restriction, 
even  if  regarded  as  a  contract,  is  unjust,  without  consideration, 
and  void;  that  it  is  against  public  policy  to  permit  telegraph  com- 
panies to  secure  exemption  from  the  consequences  of  their  own 
gross  negligence  by  contract ;  that  notwithstanding  any  special  con- 
dition which  may  be  contained  in  a  contract  between  a  company 
and  the  sender  of  a  message,  respecting  the  liability  of  the  former 
in  case  of  an  inaccurate  transmission  of  the  message,  the  company 
will  still  be  liable  for  mistakes  happening  by  its  own  fault ;  that  it 
will  depend  on  circumstances  whether  a  paper  furnished  by  the 
company  on  which  the  message  is  written,  and  signed  by  the  sender, 
is  a  contract  or  not ;  that  it  is  a  question  for  the  jury  to  determine, 
as  a  question  of  fact,  upon  evidence  aliunde,  and  from  all  the  cir- 
cumstances attending  the  signing  of  the  paper,  whether  or  not  the 
sender  of  the  dispatch  has  knowledge  of  its  terms  and  assents  to 
its  restrictions.  Tyler,  Ullman  &  Co.  v.  Western  Union  Tel.  Co.,  60 
111.  421.  The  Tyler  case  distinctly  held  that  assent  by  the  sender  of 
the  dispatch  to  the  printed  terms  and  conditions  upon  the  blank 
form  must  be  shown  in  order  to  make  such  terms  and  conditions 
binding  as  a  contract  upon  the  sender.  The  doctrine  of  the  Tyler 
case  has  been  subsequently  indorsed  and  approved  by  this  court. 


RIGHT   TO    MAKE    RULES    FOR    SERVICE,  189 

Western  Union  Tel.  Co.  v.  Tyler,  74  111.  168 ;  Western  Union  Tel. 
Co.  V.  Dubois,  supra.  If  assent  to  such  terms  and  conditions  is  nec- 
essary to  bind  the  sender  of  the  dispatch,  surely  assent  to  such 
terms  and  conditions,  as  printed  upon  a  dispatch  delivered,  will  be 
necessary  to  bind  the  receiver  thereof.  The  receiver  of  the  dispatch 
will  certainly  not  be  bound  by  a  provision  thereon  requiring  a  claim 
to  be  presented  within  60  days,  in  the  absence  of  proof  that  he  as- 
sented to  such  a  provision.  Western  Union  Tel.  Co.  v.  Fairbanks, 
15  111.  App.  600;  Western  Union  Tel.  Co.  v.  De  Golyer,  27  id. 
489 ;  Western  Union  Tel.  Co.  v.  Lycan,  60  id.  124.  It  is  said,  how- 
ever, that  the  requirement  that  the  claim  should  be  presented  within 
60  days  is  a  reasonable  requirement,  and  that  a  party  suing  for  dam- 
ages will  be  bound  to  show  that  he  has  complied  with  such  require- 
ment, if  he  had  notice  or  knowledge  of  the  same,  or  if  there  were  any 
circumstances  of  such  a  character  as  to  affect  him  with  such  notice 
or  knowledge.  Upon  an  examination  of  the  authorities,  it  will  be 
found  that  in  most  cases  where  the  provision  in  regard  to  the  limit 
of  60  days  has  been  held  to  be  reasonable,  and  notice  or  knowledge 
of  the  same  has  been  held  to  be  binding  upon  the  plaintiff  in  the 
suit,  the  controversy  has  been  between  the  sender  of  the  dispatch 
and  the  telegraph  company.  Such  doctrine,  however,  has  no  ap- 
plication as  between  the  receiver  of  the  dispatch,  whose  suit  is  in 
tort  against  the  company  for  negligence  in  the  performance  of  a 
public  duty,  and  the  telegraph  company.  From  the  rule  that  assent 
is  necessary  to  make  such  a  condition  as  the  60-day  limit  binding, 
it  necessarily  follows  that  mere  notice  or  knowledge  of  such  con- 
dition will  not  affect  the  receiver  of  the  dispatch.  (It  is  against 
public  policy  that  a  telegraph  company  may  adopt  rules,  regulat- 
ing its  relations  with  its  patrons,  which,  if  they  are  reasonable, 
shall  be  binding  upon  such  patrons  without  their  assent,  if  they 
only  have  knowledgey  Counsel  for  appellee  refer  to  the  case  of 
Oppenheimer  v.  United  States  Express  Co.,  69  111.  62,  as  support- 
ing the  doctrine  contended  for  by  them ;  but  "  there  is  in  that  case 
[Oppenheimer  Case]  no  departure  from  the  uniform  decisions  of 
this  court  that  a  carrier  cannot  be  released  from  the  duties  and  lia- 
bilities annexed  to  its  employment  unless  the  shipper  assents  to  the 
attempted  restrictions."  Boscowitz  v.  Adams  Express  Co.,  93  111. 
523. 

Some  of  the  cases  seem  to  hold  that  the  printed  conditions  upon 
blank  forms  of  telegraphic  dispatches,  including  the  one  in  refer- 
ence to  the  limit  of  60  days,  are  mere  regulations,  and  not  eon- 
tracts  between  the  sender  of  the  message  and  the  telegraph  com- 
pany, n'he  force  of  the  distinction  thus  sought  to  be  made  lies 
in  the  fact  that,  if  the  conditions  or  stipulations  are  considered 


190  RIGHT   TO   MAKE   RULES   FOR   SERVICE.  [cHAP.    III. 

as  mere  regulations,  the  assent  of  the  sender  to  them  is  not  nec- 
essary, but  that  he  will  be  bound  if  they  are  brought  home  to  his 
knowledge,  whereas,  if  they  are  held  to  be  parts  of  a  contract, 
the  assent  of  the  sender  must  be  shown  in  order  to  bind  him) 
Croswell  on  Law  of  Electricity,  §  493.  But,  whatever  may  be  the 
correct  view  of  these  conditions  as  being  regulations  or  contracts 
where  the  controversy  is  between  the  sender  of  the  dispatch  and  the 
telegraph  company,  we  are  of  the  opinion  that  such  distinction  has 
no  application  where  the  controversy  is  between  the  company  and 
the  receiver  of  the  dispatch.  Id.  §  540.  There  is  no  proof  of  con- 
tract between  the  telegraph  company  and  the  person  to  whom  the 
message  is  addressed,  and  therefore  he  could  not  be  held  bound  by 
these  conditions  or  stipulations.  Id.  §  504,  and  cases  cited  in 
note  2. 

Counsel  for  appellee  rely  mainly  upon  the  case  of  Manier  &  Co. 
V.  Western  Union  Tel.  Co.,  94  Tenn.  443,  as  authority  for  the 
position  that  such  conditions  and  stipulations  including  the  limit 
of  60  days,  are  binding  upon  the  receiver,  as  well  as  the  sender, 
of  the  dispatch.  But  we  are  not  inclined  to  assent  to  the  doc- 
trine of  the  Tennessee  case.  The  author  of  the  opinion  in  that 
case  refers  to  cases  holding  that  the  addressee  of  the  message 
is  not  bound  by  the  stipulation  as  to  the  60-day  limit,  because 
he  did  not  make  the  contract,  and  also  to  cases  holding  to  the  con- 
trary, and  says  that  it  is  not  necessary  to  determine  in  the  case 
there  under  consideration  where  the  weight  of  authority  lies.  The 
conclusion  announced  in  that  case  rests  mainly  upon  two  consid- 
erations, namely :  ( First,  that,  where  the  receiver  of  the  message 
is  a  patron  of  the  company,  he  will  be  presumed  to  have  knowl- 
edge of  the  form  of  the  contract  embodied  in  the  blanks  used ; 
second,  that  the  receiver's  right  to  recover  rests  entirely  upon  the 
contract  of  sending,  and  upon  the  principle  that,  where  two  parties 
contract  for  the  benefit  of  a  third,  such  third  party  may  maintain 
an  action  for  the  breach  of  the  agreement  in  his  own  right.:  We 
are  unable  to  see  that  these  considerations  can  have  any  influence 
where  the  action  brought  by  the  receiver  of  the  dispatch  is  an  action 
in  tort  for  damages  for  the  careless  and  negligent  performance  of  a 
public  dutyy 

The  opposite  view  from  that  contended  for  by  counsel  for  ap- 
pellee is  supported  by  respectable  authority,  and  is  in  harmony  with 
the  decisions  heretofore  rendered  by  this  court,  and  is  a  natural 
corollary  from  such  decisions.^ 

2  Compare  Birney  v.  N.  Y.  &  W.  T.  Co.  (1862),  18  Md.  341;  U.  S.  Tel. 
Co.  V.  Gildersleeve  (1868),  29  Md.  232;  Pearsall  v.  Western  U.  T.  Co. 
(1891),  124  N.  y.  256. 


EIGHT    TO    MAKE    RULES    FOR    SERVICE.  191 


CENTRAL  OF  GEOEGIA  RAILWAY  CO.  v.  MOTES. 
117  Ga.  923.     1903.^ 

Simmons,  C.  C.  .  .  .  2.  We  shall  not  at  this  time  undertake 
to  do  more  than  determine  whether  or  not,  as  regards  a  waiting 
room  in  a  city  such  as  Macon,  where  weary  travelers  may,  if  they 
wish,  procure  suitable  accommodations  for  rest  and  comfort,  regu- 
lations forbidding  the  use  by  passengers  of  benches  as  beds,  or 
any  other  attempted  transformation  of  a  railroad  waiting  room  into 
a  lodging  house,  tend  to  deprive  passengers  of  inalienable  rights, 
or  are  for  any  other  reason  to  be  regarded  as  despotic  and  unrea- 
sonable. It  is  pertinent  here  to  remark  that  there  was  no  evidence 
introduced  on  the  trial  touching  any  rule  promulgated  by  the  rail- 
road commission  of  this  state  with  respect  to  the  duty  of  a  com- 
mon carrier  to  furnish  lodgings  to  such  of  its  patrons  as  find  it  con- 
venient to  present  themselves  at  the  carrier's  depot  during  the 
night,  there  to  remain  until  the  scheduled  departure  several  hours 
later  of  a  morning  train.  Nor  have  we  been  cited  to  any  common- 
law  or  statutory  rule  which  imposes  upon  a  railway  company  any 
such  duty  towards  such  patrons,  or  to  one  holding  a  ticket,  who, 
through  his  own  fault  or  misfortune,  has  missed  an  evening  train. 
Accordingly,  we  shall  endeavor  to  decide  on  principle  whether  such 
a  duty  does  or  does  not,  as  a  general  thing,  exist.  It  seems  reason- 
able to  assert  that  a  railway  company  could  not  be  considered  unrea- 
sonable if  it  adopted  a  regulation  whereby  a  passenger  was  not  ad- 
mitted to  its  waiting  room  until  an  hour  or  so  before  the  departure, 
on  schedule  time,  of  a  train  the  passenger  desired  to  take.  Nor 
would  it  appear  more  unreasonable  for  the  carrier  to  actually  keep 
its  waiting  room  open  all  night  for  the  accommodation  of  its 
patrons,  permitting  them  to  enter  it  at  any  time  they  chose,  on 
condition  that  they  would  not  abuse  the  privilege  thus  accorded 
them  by  undertaking  to  wrest  from  the  carrier  a  night's  sleep  to 
which  they  were  not  entitled.  Many  good  reasons  might  be  sug- 
gested why  the  carrier  would  be  unwilling  to  extend  an  unqualified 
invitation  to  enter  at  will  and  stay  as  long  as  desirable.  For  in- 
stance, passengers  expecting  to  take  a  particular  train  might,  if 
permitted  to  indulge  in  inopportune  sleep,  miss  the  train,  and 
be  left  complaining  on  the  carrier's  hands,  instead  of  making  a 
timely  and  orderly  departure  and  giving  place  to  other  passengers 
entitled  to  enter  its  waiting  room  and  partake  of  the  accommoda- 
tions it  afforded.     Again,  the  carrier  could  have  a  laudable  ambi- 

1  Only  one  point  in  the  opinion  is  reprinted. —  Ed. 


193  EIGHT    TO    MAKE    RULES    FOR    SERVICE.  [CHAP.    III. 

tion  to  so  conduct  its  waiting  room  that  passengers  of  culture  and 
refinement  might  be  spared  the  disgust  of  witnessing  the  uncouth 
and  unseemly  behavior  of  a  different  class  of  travelers,  whose  sense 
of  decency  fails  to  suggest  to  them  the  impropriety  of  sprawling 
over  or  upon  benches  or  seats  designed  for  a  purpose  other  than 
that  of  affording  an  opportunity  to  retire  for  the  night  in  a 
grotesque,  if  not  offensive,  attitude  of  repose.  The  reasonable- 
ness of  a  regulation  adopted  by  a  carrier  of  passengers  with 
respect  to  the  use  to  be  made  of  its  premises  is  not  to  be  ar- 
bitrarily determined  by  applying  the  test  whether  or  not  such 
regulation  would  be  reasonable  if  adopted  by  a  carrier  of  live 
stock.  The  circumstances  of  time  and  place  are  to  be  given 
due  consideration.  On  the  Western  frontier,  years  ago,  the  rea- 
sonableness of  attempting  to  regulate  the  "  shooting  out  "  of  station 
lights  by  waiting  passengers  might  have  been  seriously  questioned 
by  at  least  some  members  of  the  traveling  public.  To-day  there 
is  doubtless  a  growing  sentiment  in  all  parts  of  the  country  against 
converting  into  a  smoking  apartment  a  general  waiting  room  pro- 
vided for  the  accommodation  of  both  sexes,  as  well  as  against  treat- 
ing with  contempt  the  invitation  held  out  by  the  station  house 
"  sand  box  "  or  cuspidor,  and  other  minor  infractions  of  the  laws 
of  etiquette  which  obtain  in  polite  society.  The  evolution  which 
has  taken  place  along  this  line  cannot  properly  be  ignored  by  the 
courts,  for  carriers  of  passengers  are  to  be  encouraged,  rather  than 
disheartened,  when  they  manifest  a  disposition  to  improve  condi- 
tions which  have  become  almost  intolerable.  To  furnish  adequate 
and  comfortable  accommodations  to  the  traveling  public  is  an 
exacting  and  serious  business,  not  mere  vain  and  expensive  trifling. 
A  prospective  traveler  who  purchases  a  railroad  ticket  with  a 
view  to  going  on  a  journey  does  not  thereby  acquire  a  right  to 
demand  of  the  carrier  that  he  be  allowed  to  enter  its  waiting  room 
eight  hours  or  so  before  the  train  he  expects  to  take  is  due,  and 
there  go  to  sleep  as  a  matter  of  course.  To  miss  his  train  will 
not  change  his  status  from  a  waiting  passenger  into  a  guest  en- 
titled to  demand  a  place  wherein  to  sleep  until  the  next  train 
bound  for  his  destination  arrives,  or  transform  the  carrier  into 
an  innkeeper  or  proprietor  of  a  lodging  house.  Indeed,  he  would 
stand  upon  no  better  footing  than  would  a  patron  of  a  public 
eating  house  who,  after  missing  his  supper  through  his  own  tardi- 
ness, might,  simply  because  he  was  the  holder  of  a  meal  ticket, 
unreasonably  claim  the  privilege  of  occupying  a  chair  at  table  in 
the  room  where  meals  were  served,  and  there  passing  his  time  in 
sleep  until  the  arrival  of  the  breakfast  hour.  Accordingly,  we 
hold,  without  hesitation,  that  a  railwa}^  company  may  with  pro- 


EIGHT   TO    MAKE    RULES    FOE    SERVICE.  193 

priety  insist  that  such  of  its  patrons  as  contemplate  taking  a 
"^morning  train  shall,  if  they  desire  to  refresh  themselves  by  slumber 
during  the  intervening  night,  find  quarters  other  than  its  waiting 
rooms. 


AMMONS  V.  EAILEOAD. 

138  N.  C.  555.     1905.^ 

Action  by  W.  E.  Ammons  against  the  Southern  Eailway  Com- 
pany, heard  by  Judge  B.  F.  Long  and  a  Jury,  at  the  August  Term, 
1904,  of  the  Superior  Court  of  Swain  County.  From  a  judgment 
of  nonsuit,  the  plaintiff  appealed. 

The  plaintiff  alleges  that  he  was  unlawfully  ejected  from  one 
of  the  defendant's  trains,  and  sues  tp  recover  damages  for  the 
wrong  thus  committed.  At  the  close  of  the  testimony,  and  after 
the  plaintiff  had  requested  certain  instructions  to  be  given  to  the 
jury,  the  court  held  that  he  could  not  recover  in  the  action.  The 
plaintiff  thereupon  submitted  to  a  nonsuit,  and  appealed.  It  is 
necessary  to  state  only  the  substance  of  his  testimony,  which  is  as 
follows :  On  June  20th  the  plaintiff  went  to  Almond,  a  station  on 
defendant's  line,  to  buy  a  ticket  to  Poland,  which  is  nine  miles 
away.  The  defendant's  agent  told  him  he  was  out  of  tickets,  but 
to  get  on  the  train,  and  he  would  tell  the  conductor  not  to  charge 
extra  fare.  The  agent  said  the  ticket  rate  was  41  cents.  The 
■extra  or  train  rate  was  65  cents.  The  agent  said  the  plaintiff  would 
have  to  pay  only  41  cents.  He  boarded  the  train,  and  the  con- 
■  ductor  asked  him  for  his  ticket.  The  plaintiff  told  him  what  the 
agent  had  said  to  him,  and  the  conductor  demanded  75  cents,  and 
said  that  the  agent  did  have  tickets.  He  then  told  the  plaintiff 
to  pay  75  cents  or  get  off.  He  pulled  the  bell  cord,  when  the 
plaintiff  said,  "  If  you  put  me  off,  I  will  sue  the  company,"  and 
the  conductor  replied,  "  It  would  not  make  a  durn  bit  of  difference 
to  me  if  you  did."  When  the  conductor  called  for  the  fare,  the 
plaintiff  offered  him  50  cents,  and  added  that  he  did  not  mind  a 
rebate,  but  did  not  want  to  pay  75  cents.  The  conductor  refused 
to  take  the  50  cents,  and  put  the  plaintiff  off  the  train  400  yards 
from  the  station.  It  is  a  rule  of  the  company  to  require  the  pay- 
ment of  25  cents  extra  when  a  passenger  has  no  ticket.  There 
was  evidence  as  to  the  damages,  not  necessary  to  be  stated. 

Walker,  J.  (after  stating  the  case).  Assuming  the  plaintiff's 
testimony  to  be  true,  and  giving  him  the  benefit  of  all  reasonable 

1  One  paragraph  of  the  opinion  is  omitted. —  Ed. 


194  RIGHT    TO    MAKE   RULES    FOR    SERVICE.  [CHAP.    III. 

inferences  therefrom,  and  this  is  the  way  it  should   be  consid- 
dered,  we   think  the   judge   erred  in  his  intimation   of   opinion 
against  the  plaintifE's  right  to  recover.     The  law  of  the  case,  at 
least  in  the  present  development  of  the  latter,  and  in  the  aspect 
of  it  now  presented,  seems  to  be  well  settled,  and  is  thus  stated  by 
a  learned  and  accurate  text-writer :     "  It  is  undoubtedly  competent 
for  a  railroad  company,  as  a  means  of  protection  against  imposi- 
tion, and  to  facilitate  the  transaction  of  its  business,  to  require 
passengers  to  procure  tickets  before  entering  the  car;  and  where 
this  requirement  is  duly  made  known,  and  reasonable  opportunities 
are  afforded  for  complying  with  it,  it  may  be  enforced  either  by 
expulsion  from  the  train,  regardless  of  a  tender  of  the  fare  in 
money,  or  by  requiring  the  payment  of  a  larger  fare  upon  the  train 
than  that  for  which  the  ticket  might  have  been  procured.     A  regu- 
lation or  by-law  of  the  carrier  is  not  unreasonable  which  provides 
that  when  such  tickets  are  not  procured  before  the  commencement 
of  the  journey,  and  the  carrier  is  therefore  put  to  the  incon- 
venience of  collecting  from  the  passenger  his  fare  during  its  prog- 
ress, the  price  of  the  carriage  shall  be  more  than  would  have  been 
charged  for  the  ticket,  and  that  upon  the  refusal  of  the  passenger 
to  pay  the  higher  fare,  not  extortionate  in  amount,  he  shall  be 
ejected.     And  if  adopted  in  good  faith,  and  with  a  view  to  facili- 
tate the  business  of  the  carrier,  there  can  be  certainly  nothing  un- 
reasonable or  unjust  in  such  rule,  especially  in  the  case  of  railway 
carriers.     But,  as  a  condition  precedent  to  the  existence  of  this 
right  of  expulsion  for  the  refusal  to  procure  a  ticket  or  to  pay 
the  higher  fare,  an  opportunity,  at  least  reasonable,  and  such  as  the 
statute  requires  where  a  statute  exists,  must  have  been  afforded  by 
the  carrier  to  the  passenger,  not  himself  in  fault,  to  provide  himself 
with  the  required  ticket.     If,  therefore,  no  office  be  kept  or  opened 
at  the  proper  time,  nor  adequate  facilities  be  provided  for  the 
purpose  of  supplying  passengers  with  them,  or  if  the  office  provided 
for  the  purpose  be  closed  before  the  time  fixed  by  law  or  by  a  rule 
of  the  carrier,  and  for  either  reason  the  passenger  has  been  unable 
to  obtain  a  ticket,  the  higher  rate  cannot  be  lawfully  demanded. 
And  if,  without  having  afforded  such  proper  facilities  to  the  pas- 
senger, the  carrier  should  exact  from  him  the  additional  charge 
for  carriage  without  a  ticket,  the  former  may  sue  for  and  recover 
the  amount  so  paid  above  the  established  rate  when  a  ticket  is 
purchased;  and  if,  upon  his  refusal  to  pay  it,  he  be  ejected,  when 
he  is  ready  and  offers  to  pay  his  fare  at  such  established  rate,  his 
expulsion  will  be  illegal,  and  he  may  recover  damages  for  the  tres- 
pass."    Hutchinson  on  Carriers  (2d  Ed.)     §  570  et  seq.;  5  Am.  & 
Eng.  Enc.  of  Law  (2d  Ed.)  p.  595,  and  note  4.     These  principles 


EIGHT    TO    MAKE   RULES    FOR    SERVICE.  195 

are  well  sustained  by  the  authorities  cited  in  their  support,  and 
are  in  themselves  most  just  and  reasonable.  They  apply  with 
peculiar  force  to  the  facts  of  this  case. 

The  plaintiff's  right  of  recovery  cannot  be  made  to  depend  upon 
the  conductor's  knowledge  or  ignorance  of  the  fact  that  the  agent 
had  no  tickets  for  sale  to  intended  passengers.  If  he  did  not 
know  it,  and  refused  to  accept  and  act  upon  the  plaintilf's  state- 
ment, no  fault  can  be  imputed  to  the  plaintiff,  and  the  defendant 
cannot  escape  liability,  as  the  cause  of  action  rests  upon  the  fact 
that  there  was  no  opportunity  afforded  to  purchase  a  ticket,  and 
the  plaintiff  is  not  responsible,  and  cannot  be  made  to  suffer,  for 
the  conductor's  ignorance  of  existing  conditions;  The  defendant's 
station  agent  could  easily  have  informed  the  conductor  that  his 
tickets  had  been  exhausted,  and  actually  promised  the  plaintiff'  to 
do  so,  so  that  in  this  case  there  was  no  excuse  for  a  want  of  knowl- 
edge of  the  facts.  It  is  sufficient  to  declare,  in  the  light  of  the 
authorities  and  with  the  plaintiff's  testimony  before  us,  that  he 
was  entitled  to  have  the  case  submitted  to  the  jury  under  proper 
instructions  from  the  court.  Having  so  decided,  we  need  not  dis- 
cuss the  question  of  damages.  The  subject,  though,  has  recently 
been  considered  by  this  court  in  the  following  case:  Holmes  v. 
Railroad,  94  N.  C.  318;  Eose  v.  Railroad,  106  N.  C.  168;  Tomlin- 
son  V.  Railroad,  107  N.  C.  327;  Allen  v.  Railroad,  119  N.  C.  710; 
Remington  v.  Kirby,  120  N.  C.  320.  There  was  error  in  the  ruling 
of  the  court  that  the  plaintiff  upon  his  own  showing  was  not  en- 
titled to  recover. 

New  trial.^ 


TOWNSEND    V.    NEW    YORK    CENTRAL    AND    HUDSON 
RIVER  RAILROAD  CO. 

56  N.  Y.  295.     1874.^ 

Grover,  J.  This  action  was  brought  by  the  plaintiff  to  recover 
damages  for  an  assault  upon  and  forcibly  ejecting  him  from  its 
car,  at  Staatsburg,  a  station  on  defendant's  road  between  Pough- 
keepsie  and  Rhinebeck. 

2  See  Chase  v.  N.  Y.  Cent.  R.  R.  Co.  (1863),  26  N.  Y.  523 ;  Mills  r.  M.  K. 
&  T.  Ry.  Co.   (1900),  M  Tex.  242. 

As  to  exhibition  of  ticket  on  train,  see  Hibbard  v.  N.  Y.  &  Erie  R.  R. 
Co.   (1857),  15  N.  Y.  455. 

As  to  refusal  to  surrender  ticket  without  receiving  a  check,  see  State  v. 
Thompson  (1850),  20  N.  H.  250. 

As  to  regulations  with  regard  to  carrying  of  parcels  by  passengers,  see 
Morris  v.  Atlantic  Ave.  R.  R.  Co.  (1889),  116  N.  Y.  552;  Bullock  i'.  Del., 
L.  &  W.  R.  R.  Co.   (1897),  60  N.  J.  L.  24. 

1  The  arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


196  RIGHT    TO    MAKE    RULES    FOR    SERVICE.  [CHAP.    III. 

The  jury  by  their  verdict  have  found  that  the  plaintiff  purchased 
a  ticket  at  the  station  at  Sing  Sing,  for  Ehinebeck;  that  with  this 
ticket  he  went  on  board  a  train  from  New  York,  going  no  farther 
north  than  Poughkeepsie ;  that  after  this  train  passed  Peekskill  the 
conductor  called  for  tickets  and  the  plaintiff  handed  his  to  him, 
which  he  took  and  retained,  giving  to  the  plaintiff  no  check  or  other 
evidence  showing  any  right  to  a  passage  upon  any  train  of  the 
defendant;  nor  did  the  plaintiff  ask  for  a  return  of  his  ticket  or 
for  any  such  evidence.  Upon  the  arrival  of  the  train  at  Pough- 
keepsie, where  it  stopped,  the  plaintiff  got  out  and  waited  at  the 
station  until  another  train  arrived  from  New  York,  which  was 
going  to  Albany,  stopping  at  Ehinebeck.  The  plaintiff  got  into 
and  seated  himself  in  a  car  in  this  train;  and  after  it  started  the 
conductor  called  upon  hirn  for  his  ticket;  in  reply  to  which  the 
plaintiff  told  him  that  he  had  purchased  a  ticket  from  Sing  Sing 
to  Ehinebeck,  which  the  conductor  of  the  other  train  had  taken 
and  had  not  given  back  to  him;  some  of  the  passengers  told  the 
conductor  that  the  plaintiff  had  had  such  a  ticket.  The  conductor 
told  the  plaintiff  that  it  was  his  duty  in  case  he  had  no  ticket  to 
collect  the  fare,  and  that  the  other  conductor  would  make  it  right 
with  him.  The  plaintiff  refused  to  pay  fare,  and  the  conductor 
told  him  he  must  leave  the  train.  This  the  plaintiff  refused  to 
do,  insisting  upon  his  right  to  a  passage  to  Ehinebeck  upon  the 
ticket  which  the  conductor  of  the  other  train  had  taken.  Upon  the 
arrival  of  the  train  at  Staatsburg,  a  regular  station,  the  plaintiff 
still  refusing  to  pay  fare  or  to  leave  the  train  upon  request,  was 
taken  hold  of  and  such  force  used  as  was  necessary  to  overcome  his 
resistance,  and  ejected  from  the  car.  This  was  the  injury  for  which 
the  recovery  was  had. 

In  Hibbard  v.  The  New  York  and  Erie  Eailroad  Co.  (15  N.  Y., 
455)  it  was  held  by  this  court  that  a  railroad  company  had  the 
right  to  establish  reasonable  regulations  for  the  government  of 
passengers  upon  its  trains,  and  forcibly  eject  therefrom  those  who 
refused  to  comply  with  such  regulations.  Surely,  a  regulation  re- 
quiring passengers  either  to  present  evidence  to  the  conductor  of  a 
right  to  a  seat,  when  reasonably  required  so  to  do,  or  to  pay  fare, 
is  reasonable;  and  for  non-compliance  therewith  such  passenger 
may  be  excluded  from  the  car.  The  question  in  this  case  is  whether 
a  wrongful  taking  of  a  ticket  from  a  passenger  by  the  conductor 
of  one  train,  exonerates  him  from  compliance  with  the  regula- 
tion in  another  train,  on  which  he  wishes  to  proceed  upon  his 
journey.  I  am  unable  to  see  how  the  wrongful  act  of  the  previous 
conductor  can  at  all  justify  the  passenger  in  violating  the  lawful 
regulations  upon  another  train.     For  the  wrongful  act  in  taking 


EIGHT   TO    MAKE   RULES    FOR    SERVICE.  197 

his  ticket  he  has  a  complete  remedy  against  the  company.  The 
conductor  of  the  train  upon  which  he  was  was  not  bound  to  take 
his  word  that  he  had  had  a  ticket  showing  his  right  to  a  passage 
to  Ehinebeck,  which  had  been  taken  up  by  the  conductor  of  the 
other  train.  His  statement  to  that  effect  was  wholly  immaterial, 
and  it  was  the  duty  of  the  conductor  to  the  company  to  enforce 
the  regulation,  as  was  rightly  held  by  the  trial  judge,  by  putting 
the  plaintiff  off,  in  case  he  persistently  refused  to  pay  fare.  The 
question  is,  whether  under  the  facts  found  by  the  jury,  resistance 
in  the  performance  of  this  duty  was  lawful  on  the  part  of  the 
plaintiff.  If  so,  the  singular  case  is  presented,  where  the  regula- 
tion of  the  company  was  lawful,  where  the  conductor  owed  a  duty 
to  the  company  to  execute  it,  and  at  the  same  time  the  plaintiff 
had  the  right  to  repel  force  by  force  and  use  all  that  was  necessary 
to  retain  his  seat  in  the  car.  Thus,  a  desperate  struggle  might 
ensue,  attended  by  very  serious  consequences,  when  both  sides  were 
entirely  in  the  right,  so  far  as  either  could  ascertain.  All  this  is 
claimed  to  result  from  the  wrongful  act  of  the  conductor  of  an- 
other train,  in  taking  a  ticket  from  the  plaintiff,  for  which  wrong 
the  plaintiff  had  a  perfect  remedy,  without  inviting  the  commission 
of  an  assault  and  battery  by  persisting  in  retaining  a  seat  upon 
another  train  in  violation  of  the  lawful  regulations  by  which  those 
in  charge  were  bound  to  govern  themselves.  It  was  conceded  by 
the  counsel,  upon  the  argument,  that  one  buying  a  ticket,  say 
from  Albany  for  Buffalo,  which  was  wrongfully  taken  from  him 
by  a  servant  of  the  compan}',  and  who  had  once  been  put  off  for  a 
refusal  to  pay  fare,  would  not  have  the  right  to  go  upon  other 
trains  going  to  Buffalo,  and  if  forcibly  ejected  therefrom  maintain 
actions  against  the  company  for  the  injuries  so  inflicted.  The 
reason  why  he  could  not,  given  by  the  counsel,  was,  that  being 
once  ejected  was  notice  that  he  could  not  have  a  seat  upon  the 
ticket  which  he  claimed  had  been  taken  from  him.  But  when  the 
conductor  in  charge  of  the  train  explicitly  tells  him  that  he  can- 
not retain  his  seat  upon  that  ticket,  that  he  must  pay  fare  or  leave 
the  car,  does  it  not  amount  to  the  same  thing?  He  then  knows 
that  he  cannot  proceed  upon  the  ticket  taken,  but  must  resort  to  his 
remedy  the  same  as  though  he  had  been  ejected.  If,  after  this  no- 
tice, he  waits  for  the  application  of  force  to  remove  him,  he  does 
so  in  his  own  wrong;  he  invites  the  use  of  the  force  necessary  to 
remove  him;  and  if  no  more  is  applied  than  is  necessary  to  effect 
the  object,  he  can  neither  recover  against  the  conductor  or  com- 
pany therefor.  This  is  the  rule  deducible  from  the  analogies  of 
the  law.  No  one  has  a  right  to  resort  to  force  to  compel  the  per- 
formance of  a  contract  made  with  him  by  another.     He  must  avail 


198  EIGHT    TO    MAKE    RULES    FOR   SERVICE.  [CHAP.    III. 

himself  of  the  remedies  the  law  provides  in  such  case.  This  rule 
will  prevent  breaches  of  the  peace  instead  of  producing  them;  it 
will  leave  the  company  responsible  for  the  wrong  done  by  its  serv- 
ant without  aggravating  it  by  a  liability  to  pay  thousands  of  dol- 
lars for  injuries  received  by  an  assault  and  battery,  caused  by  the 
faithful  efforts  of  its  servants  to  enforce  its  lawful  regulations.^ 


BURGE  V.  GEORGIA  RAILWAY  AND  ELECTRIC  CO. 

TS"'^  .    /  133  Ga.  423.     1909.^ 

HoLDEX,  J.  The  plaintiff  brought  suit  against  the  defendant,  a 
corporation  operating  a  system  of  street  railways  in  the  city  of  At- 
lanta, for  damages,  alleging  that  on  the  22nd  day  of  September, 
1906,  he,  in  company  with  his  brother  and  another  party,  boarded 
one  of  the  defendant's  cars  in  the  city  for  the  purpose  of  riding 
thereon  to  the  center  of  the  city.  He  tendered  to  the  conductor 
a  $5  gold  piece  and  asked  him  to  take  out  three  fares.  The  con- 
ductor replied  that  he  could  not  change  the  money,  and  that  the 
petitioner  and  his  two  companions  must  leave  the  car.  The  con- 
ductor forcibly  ejected  the  plaintiff  from  the  car.  The  defendant 
proved  that  there  was  in  operation  a  rule  of  the  defendant  com- 
pany, requiring  its  conductors  to  make  change  where  the  amount 
tendered  was  not  above  $3,  but  not  to  furnish  change  for  a  greater 
amount  for  passengers. 

2.  The  only  other  point  referred  to  or  insisted  upon  by  counsel 
for  the  plaintiff  is  that  the  plaintiff  had  the  right  to  have  the  jury 
pass  upon  the  question  as  to  whether  or  not  the  conductor  should 
have  accepted  a  $5  gold  piece  and  made  change  thereof  in  order  to 
pay  three  fares.  It  would  not  be  right  to  require  conductors  to 
carry  such  an  amount  of  small  change  as  would  be  necessary  to 
change  any  denomination  of  money,  nor  would  it  be  proper  to 
require  passengers  to  tender  the  exact  amount  of  fare;  hence,  the 
law  requires  that  the  conductor  go  prepared  to  change  an  amount 
that  is  reasonable.  Street  railways  have  the  right  to  enact  a  rea- 
sonable rule  in  regard  to  such  matters,  so  as  to  fix  an  amount  which 
conductors  are  required  to  carry  and  which  the  public  may  expect 
them  to  carry  for  the  purpose  of  supplying  change  to  passengers. 
In  this  connection,  see  Southern  Ry.  Co.  v.  Watson,  110  Ga.  681 

2  See  Bradshaw  v.  South  Boston  R.  R.  Co.  (1883),  135  Mass.  407;  Kiley 
V.  Chic.  City  Ry.  Co.   (1901),  189  111.  384. 

1  Part  of  the  opinion  is  omitted. —  Ed. 


EIGHT    TO    MAKE   RULES    FOR    SERVICE.  199 

(36  S.  E.  209)  ;  6  Cyc.  545.     The  rule  in  the  present  case  was 
one  requiring  conductors  to  carry  change  to  the  amount  of  $3  and 
no  more.     Whether  or  not  such  a  rule  is  a  reasonable  one  is  a 
matter  of  law  to  be  determined  by  the  court.     Southern  Ey.  Co. 
V.  Watson,  110  Ga.  681,  682  (36  S.  E.  209)  ;  Central  of  Ga.  Ey. 
Co.  V.  Motes,  117  Ga.  923  (43  S.  E.  990,  62  L.  E.  A.  507,  97  Am. 
St.  E.  223).     The  public,  as  well  as  the  corporation,  are  interested 
that  some  fixed  rule  should  exist,  and  it  is  proper  that  it  should  be 
a  question  of  law  whether  the  rule  is  a  reasonable  one.     What  might 
appear  reasonable  to  one  jury  might  not  so  appear  to  another; 
and  if  it  were  a  question  of  fact  to  be  determined  by  a  jury,  no 
fixed  rule  by  which  the  corporation  and  the  public  should  be  gov- 
erned could  exist.     To  require  conductors  to  carry  an  amount  suflB- 
cient  to  change  $5  for  all  passengers  who  might  tender  that  amount 
to  pay  the  fare  charged  for  transportation  within  the  city  would 
require  all  conductors,  at  all  times,  to  carry  a  considerable  amount 
of  change.     To  require  conductors  to  obtain,  count  out,  and  de- 
liver change  for  $5  for  every  passenger  who  might  tender  that 
amount  would  make  slow  the  collection  of  fares,  with  the  probable 
result  of  delaying  the  progress  of  cars  and  subjecting  the  traveling 
public  to  the  inconvenience  of  frequent  waits  and  delays  made 
necessary  by  the  changing  of  such  a  denomination  of  currency. 
Such  a  requirement  might  not  only  result  in  great  inconvenience 
to  the  public,  but  impose  a  heavy  and  unnecessary  burden  on  the 
railway  company.     Every  street-railway  company  should  discharge 
its  duties  to  the  public  in  a  proper  manner ;  and  in  order  to  do  so, 
it  has  a  right  to  make  and  enforce  reasonable  rules.     To  require 
conductors  to  change  $5  for  every  passenger  tendering  that  amount 
would  prevent  the  company  from  performing  its  public  duty  with 
proper  caution  and  with  proper  expedition.     The  rule  requiring 
conductors  to  change  no  amount  greater  than  $2  works  no  great 
hardship  on  the  passenger,  though  a  rule  requiring  the  changing  of 
larger  amounts  might  prove  very  burdensome  to  the  company.     The 
fact  that  the  plaintiff  asked  that  the  fares  of  his  two  companions 
be  also  taken  out  of  the  $5  coin  tendered  does  not  place  him  in 
any  better  position  than  if  only  one  fare  was  to  be  taken  out,  since 
the  amount  of  change  which  the  conductor  would  be  required  to  fur- 
nish in  order  to  collect  the  three  fares  or  the  fare  of  the  plaintiff 
alone  would  still  be  greater  than  $2.     The  rule  of  the  street-rail- 
way company,  requiring  conductors  to  make  change  to  the  ex- 
tent of  $2  and  no  more,  is  a  reasonable  rule,  and  the  court  com- 
mitted no  error  in  so  holding.     Wynn  v.  Ga.  Ey.  &  Elect.  Co.,  6 
Ga.  App.  77  (64  S.  E.  278)  ;  Barker  v.  Central  Park,  N".  &  E.  Eiver 
Co.,  151  N.  Y.  237  (45  N.  E.  550,  35  L.  E.  A.  489,  56  Am.  St.  E. 


200  RIGHT    TO    MAKE    RULES    FOR    SERVICE.  [CHAP.    Ill, 

626)  ;  Muldowney  v.  P.  B.  Traction  Co.,  8  Pa.  Sup.  Ct.  335.     The 
court  below  was  right  in  directing  a  verdict,  and  its  judgment  is 

Affirmed.     All  the  Justices  concur.^ 


SHIEAS  V.  EWING. 

48  Kan.  170.     1892.^ 

Opinion  by  Strang,  C.  :  Action  for  damages.  The  plaintiff, 
who  was  also  plaintiff  below,  a  resident  of  the  city  of  Ottawa,  in 
this  state,  contracted  with  the  Cherryvale  Water  &  Manufacturing 
Company  for  a  supply  of  water  for  the  purpose  of  sprinkling  his 
lawn,  the  use  of  the^water.to  be  regulated  by  the  rules,  and  regula- 
tions of  the  water  company.  The  defendant,  C.  T.  Ewing,  the  as- 
signee and  successor  of  the  water  company,  by  his  agent,  the  man- 
ager of  said  water  company,  for  the  alleged  violation  of  the  rules 
and  regulations  of  said  company  by  the  plaintiff,  Mr.  Shiras,  in  the' 
use  of  the  water  supplied  him  by  said  company,  shut  off  his  supply 
of  water  for  the  period  of  about  two  months  from  August  10,  1887.. 
The  plaintiff  alleged  that  the  defendant  unlawfully  shut  off  his 
supply  of  water,  and  that  because  of  the  withdrawal  thereof  a 
I  number  of  his  shade-trees  died,  and  the  grass  on  his  lawn  also 
'died  out.  For  these  he  claimed  damages.  The  case  was  tried  by 
the  court  and  a  jury,  resulting  in  a  verdict  and  judgment  for  the 
defendant.     Motion  for  new  trial  was  heard  and  overruled. 

The  company  in  this  case  made  rules  for  the  regulation  of  the 
use  of  the  water  supplied  by  it  to  its  patrons.  The  contract  of 
the  plaintiff  with  the  company  was  made  subject  thereto,  and  the 
plaintiff  was  furnished  with  a  copy  of  such  rules  before  the  vio- 
lation thereof  complained  of,  and  for  which  his  water  was  shut 
off,  occurred.  The  evidence  tends  to  prove  that  the  plaintiff  vio- 
lated them.  The  jury  found  against  him,  and  in  so  finding  de- 
termined that  he  did  violate  them.  The  court  found  that  the 
rules  of  the  company  were  reasonable.  We  do  not  desire  to  say 
whether  as  a  wdiole  they  are  reasonable  or  not.  The  evidence 
strongly  tends  to  show  that  the  plaintiff's  washer,  whence  he  got 
his  supply  of  water,  was  left  open  all  night,  and  the  water  was 
left  to  run  to  waste.  AVe  think  the  jury  found  that  it  was  left  to 
run  to  waste.  The  company  presented  the  plaintiff  a  bill  for  the 
water  so  wasted.  He  refused  to  pay  it.  The  bill,  which  was  first 
$3,  was  afterwards  reduced  to  $1.50,  and  still  he  refused  to  pay  it. 

2  See  Barker  v.  R.  R.  Co.  (1896),  151  N.  T.  237;  Knoxville  Traction  Co. 
V.  Wilkerson  (1906),  117  Tenn.  482. 

1  Part  of  the  opinion  is  omitted. —  Ed. 


EIGHT   TO   MAKE   RULES   FOR   SERVICE.  201 

His  refusal  was  not  based  upon  the  idea  that  the  bill  was  too  high, 
because  he  said  he  would  not  pay  anything  for  the  water  so  wasted- 
It  is  true  he  claimed  it  had  not  been  let  to  run  to  waste  by  him- 
self, nor  by  his  permission.  But,  under  the  evidence  as  to  the  negli- 
gent and  careless  use  of  tlie  water  by  the  plaintiff,  it  was  not  diffi- 
cult for  the  jury  to  believe  that  the  washer  was  left  open  by  the 
negligence  of  himself  or  his  family.  Under  the  instructions  of 
the  court  upon  that  question,  and  a  general  verdict  for  the  defend- 
ant, it  is  undoubtedly  true  that  the  jury  so  found.  A  rule  of  the 
company  against  the  unnecessary  and  useless  waste  of  the  water 
supply  is  certainly  reasonable. 

This  is  all  we  hold  in  this  case.  This  requires  this  court  to 
affirm  the  judgment  of  the  district  court  herein,  and  we  therefore 
so  recommend. 

By  the  Court:     It  is  so  ordered. 

All  the  Justices  concurring.^ 


SHEPARD  V.  THE  MILWAUKEE  GAS  LIGHT  CO. 

6  Wis.  539.     1859.^ 

Smith,  J.  The  only  reason  urged  for  refusing  to  furnish  the 
gas  to  the  plaintiff  was,  that  he  refused  to  sign  the  regulations 
adopted  by  the  company.  This  leads  us  to  examine  those  regula- 
tions, and  to  determine  whether  or  not  they  were  such  as  the  com- 
pany could  rightfully  require  the  plaintiff  to  subscribe  to,  as  a 
condition  precedent  to  his  right  to  demand  the  gas. 

We  shall  not  attempt  to  discuss  all  of  these  regulations,  sepa- 
rately, though  we  are  requested  so  to  do;  but  shall  only  point  out 
some  of  them  which  we  think  are  unreasonable,  and  which  the 
company  had  no  right  to  impose.  But  before  doing  so,  we  wish  to 
be  distinctly  understood,  that  in  our  opinion,  they  have  a  right  to 
make  all  such  needful  rules  and  regulations  for  their  own  and  the 
convenience  and  security  of  the  public,  as  are  reasonable  and  just, 
and  to  exact  a  promise  of  conformity  thereto.  But  these  rules 
and  regulations  must  be  reasonable,  just,  lawful,  not  capricious, 
arbitrary,  oppressive  or  unreasonable.  Were  it  not  so,  the  whole 
net  work  of  pipes  and  machinery  would  be  at  the  mercy  of  the 
careless,  the  fraudulent  or  the  malignant.  From  the  nature  of 
the  article  produced  and  used,  as  well  as  from  the  manner  of 
its  use,  great  care  is  requisite  in  its  management,  and  there  is  a 

2- See  Watauga  Water  Co.  v.  Wolfe  (1897),  99  Tenn.  429. 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion 
are  omitted. —  Ed. 


202  RIGHT    TO    MAKE    RULES    FOR    SERVICE,  [CHAP.    III. 

kind  of  implied  duty  or  obligation  resting  upon  those  who  use  the 
gas,  to  use  it  in  such  a  manner  as  not  to  injure  or  endanger  others 
who  use  it.  Hence  we  see  no  objection  to  a  rule  or  regulation  of 
the  company  requiring  application  for  gas  to  be  made  in  writing, 
and  requiring  the  applicant  to  sign  reasonable  regulations. 

The  3rd  rule  of  the  company,  allowing  the  company  to  demand 
security  for  the  gas  consumed,  or  a  deposit  of  money  to  secure  pay- 
ment thereof,  appears  to  be  just  and  necessary  to  guard  against  loss. 
As  the  delivery  of  the  gas  is  necessarily  its  consumption,  and  as  the 
amount  delivered  is  ascertained  by  the  amount  consumed,  it  would 
seem  to  be  just  and  right  that  the  company  should  not  be  com- 
pelled to  furnish  it  without  reasonable  security  for  payment,  in 
convenient  amounts  and  at  proper  periods. 

The  9th  rule  is  also  objected  to  as  illegal.  This  authorizes  the 
company,  by  their  inspector,  to  have  free  access  at  all  times  to 
buildings  and  dwellings,  to  examine  the  whole  apparatus  and  for 
the  removal  of  the  meter  and  service  pipe. 

The  gas  apparatus  in  the  buildings,  stores  and  dwellings,  is  the 
property  of  the  individual,  put  up  at  his  own  expense,  in  which 
the  company  have  no  interest.  It  may  be  proper  for  the  company 
to  have  the  right  of  inspecting  the  gas  apparatus  to  determine 
its  sufficiency  and  safety  and,  at  stated  periods,  to  inspect  the  same, 
or  perhaps  oftener,  upon  reasonable  notice  therefor.  But  certainly 
it  cannot  be  necessary  that  the  dwellings  of  gas  consumers  should 
be  subject  to  instantaneous  visitation  at  all  times  without  notice. 
Nor  is  it  to  be  conceded  that  the  company  should  have  the  right, 
at  all  times,  to  enter  the  premises  and  remove  the  service  and  meter 
at  their  pleasure.  This  regulation  is  too  general  and  cannot  be 
upheld,  or  at  least  a  party  cannot  be  required  to  subscribe  to  it 
to  entitle  him  to  be  furnished  with  gas. 

Another  regulation  (14)  reserves  to  the  company  the  right  at 
any  time  to  cut  off  communication  of  the  service  pipe,  if  they  shall 
find  it  necessary  so  to  do,  to  protect  the  works  against  abuse  or 
fraud.  Here  the  company  assume  the  whole  power  to  decide  upon 
the  question  of  abuse  or  fraud,  either  in  fact  or  in  anticipation, 
without  notice,  without  trial,  of  their  own  mere  motion.  This  sum- 
mary jurisdiction  would  not  be  given  to  any  of  the  judicial  courts 
in  any  case,  but  upon  the  most  urgent  emergency.  Much  less 
could  it  have  been  the  intention  to  confer  such  power  upon  one  of 
the  parties  to  a  contract  of  such  vital  importance.  It  is  no  hard- 
ship for  the  company  to  resort  to  the  same  tribunals,  upon  like  pro- 
cess, for  protection  against  fraud,  as  the  law  provides  for  individ- 
uals. 

Eule  16  provides,  that  after  the  admission  of  gas  into  the  fittings. 


EIGHT    TO    MAKE   RULES    FOR    SERVICE.  203 

they  must  not  be  disconnected  or  opened,  either  for  alteration  or  re- 
pairs, or  extensions,  without  a  permit  from  the  company,  which 
may  be  obtained  at  their  office,  free  of  expense ;  and  any  gas  fitter 
or  other  person,  who  may  violate  this  regulation,  will  be  held 
liable  to  pay  treble  the  amount  of  damages  occasioned  thereby. 

Tt  iR_,nnt  to  be  allowed  that  the  gas  company  can  impose  pen- 
alties in  this  way,  or  make  the  submission  to  such  penalties  a  condi- 
tion precedent  to  the  right  of  the  citizen  to  be  furnished  with 
gas.  It  is  singular,  if  the  legislature  has  given  to  the  gas  com- 
pany the  right  to  inhibit  the  citizen  from  altering  the  arrange- 
ment of  his  gas  apparatus  in  his  dwelling  without  their  assent 
first  had  and  obtained,  or  from  extending  the  same ;  and  still  more 
singular  that  the  company  should  claim  the  sovereign  right  to  in- 
flict penalties  upon  him  for  doing  so,  and  not  him  only,  but  upon 
any  other  person  who  should  act  in  the  matter  without  their  con- 
sent.    The  statement  of  this  proposition  is  its  answer. 

Kule  17  provides,  that  the  company  shall  have  the  right  to  sub- 
stitute alcohol  for  water  in  the  meters,  and  charge  therefor.  All 
that  is  necessary  to  observe  upon  this  regulation,  is,  that  the  com- 
pany are  entitled  to  charge  for  the  gas  consumed,  and  that  some 
accurate  mode  of  measurement  must  be  used,  whether  of  alcoliol  or 
water.  The  consumer  must  pay  the  legal  rates  for  the  quantity 
consumed;  and  the  mode  of  measurement,  whatever  it  is,  must 
be  correct. 

Rule  21  assumes  for  the  company  the  power  to  make  any  other 
rules  or  regulations,  from  time  to  time,  under  which  the  gas 
company  will  furnish  private  consumers,  as  experience  shall  sug- 
gest, &c. 

What  we  have  said  before  as  to  the  power  of  the  company  to 
prescribe  reasonable  rules  and  regulations,  is  a  sufficient  answer 
to  the  question  raised,  or  wliich  may  be  raised  thereon. 

It  is  not  necessary  to  go  farther.  Indeed  we  might  have  stopped 
much  earlier,  and  would  have  done  so,  but  for  what  we  under- 
stood to  be  the  desire  of  the  parties  for  a  full  examination  of  all 
the  questions  involved  in  this  action. 

Without  recapitulation,  we  have  no  doubt  that  the  judgment 
of  the  county  court  was  right,  and  that  the  judgment  ought  to 
be,  and  it  is  affirmed,  with  costs. 


204  EIGHT    TO    MAKE   RULES    FOR    SERVICE.  [CHAP.    III. 

WESTEEN  UNION  TELEGRAPH  CO.  v.   TROTTER. 

55  111.  App.  659.     1894. 

Mr.  Presiding  Justice  Wall  delivered  the  opinion  of  the  Court. 

Appellee  recovered  a  judgment  against  appellant  for  $13-4.09  for 
failing  to  deliver  a  telegram  addressed  to  him  by  a  commission 
firm  in  Chicago.  Appellee  was  a  farmer,  residing  a  mile  and  a 
quarter  from  the  village  of  Kansas.  Having  some  marketable 
cattle  which  he  wished  to  sell  he  wrote  to  the  commission  firm 
for  information  and  they  sent  him  the  telegram  in  question.  They 
did  not  know  whether  he  lived  in  the  village  or  what  arrangements 
he  might  have  made  for  having  a  telegram  delivered  to  him  and 
paid  merely  for  its  transmission  to  Kansas.  The  operator  did 
not  know  the  appellee  but  made  effort  to  find  him  within  the  vil- 
lage and  failed  to  do  so.  He  learned,  however,  where  he  lived, 
and  it  being  beyond  the  free  delivery  limits,  did  nothing  further. 
The  appellant  having  heard  in  some  indirect  way  that  there  was  a 
telegram  for  him,  called  at  the  office  and  received  it.  In  the  mean- 
time, not  having  heard  from  this  commission  firm,  he  had  sent  his 
cattle  to  another  firm. 

The  claim  is  that  if  he  had  received  the  telegram  promptly  he 
would  have  sent  the  cattle  in  response  thereto  by  the  first  train, 
and  would  have  realized  a  higher  price  than  that  received.  The 
verdict  represents  the  alleged  difference.  The  telegram  was  re- 
ceived at  Kansas  at  1 :10  p.  m.,  July  5,  1892.  It  did  not  reach 
the  hands  of  appellee  until  the  9th. 

It  appears  that  by  a  rule  of  the  company  the  free  delivery  limit 
for  a  town  of  less  than  5,000  inhabitants  was  one-half  mile  from 
the  office. 

It  is  urged  on  the  one  side  that  this  is  a  reasonable  rule  and  that 
it  should  be  enforced,  and  on  the  other  that  whether  reasonable 
or  not  it  does  not  appear  that  the  sender  or  the  appellee  knew 
of  it,  and  so  it  is  not  binding  on  either.  The  rule  is  reasonable, 
and  not  only  so,  but  it  is  a  matter  of  common  knowledge  among 
business  men  that  there  is  always  a  limit  for  the  free  delivery  of 
messages. 

The  trouble  here  was  that  the  appellee  did  not  expect  a  reply 
by  wire.  He  went  to  the  post  office  daily,  but  as  he  had  not  in- 
structed the  commission  men  to  telegraph  him  it  did  not  occur 
to  him  that  they  would,  and  they  not  knowing  that  he  lived  be- 
yond the  limit,  made  no  arrangement  with  the  company  for  delivery 
of  the  messao-e.     Hence  it  was  bound  to  do  no  more  than  it  was 


RIGHT   TO    MAKE   RULES    FOR    SERVICE.  205 

paid  for,  that  is,  transmit  the  message  to  the  designated  office  and 
there  make  reasonable  effort  to  deliver  it  within  the  free  limit. 

It  is  argued  that  the  agent  should  have  known  from  its  terms, 
that  it  was  a  message  of  importance,  but  this  did  not  require  him 
to  go  beyond  the  limits  of  free  delivery.  If  he  inferred  that  the 
message  was  of  unusual  importance,  he  must  also  have  inferred 
that  the  appellee  was  expecting  it,  and  not  living  within  the  limits, 
would  call  for  it.  At  any  rate,  such  a  conclusion  on  his  part  would 
have  been  reasonable. 

We  are  of  the  opinion  that  the  case  shown  by  the  proof  did 
not  justify  the  judgment,  which  will  therefore  be  reversed  and 
the  cause  remanded.^ 


CAMPBELL  V.   WESTERN"  UNION  TELEGEAPH  CO. 

74  S.  C.  300.     1900.^ 

Mr.  Justice  Gary.  This  is  an  action  for  damages  for  failure 
to  deliver  a  telegram  within  a  reasonable  time. 

The  next  question  for  consideration  is,  whether  the  Circuit 
Judge  was  in  error,  in  ruling  that  when  a  person  to  whom  a  mes- 
sage is  addressed,  resides  within  a  reasonable  distance  from  the 
company's  office,  though  not  within  the  free  delivery  limits,  it  can- 
not refuse  to  deliver  the  telegram,  unless  it  demands  additional 
compensation  from  the  sender,  and  he  declines  to  pay  it.  In  other 
words,  that  it  is  the  duty  of  the  defendant  to  notify  the  sender, 
it  would  not  deliver  the  message,  unless  he  made  additional  com- 
pensation for  the  service  beyond  the  free  delivery  limits.  The  de- 
fendant is  a  common  carrier  in  its  line  of  business  (sec.  3,  art. 
IX.,  of  the  Constitution),  and  the  law  imposes  upon  it  the  duty 
of  delivering  all  messages,  when  the  persons  to  whom  they  are 
addressed  reside  within  a  reasonable  distance  from  the  terminal 
office.  The  company,  however,  has  the  right  to  make  reasonable 
regulations  as  to  free  delivery  limits,  and  as  to  additional  charges 
for  services  rendered  beyond  such  limits. 

In  the  case  of  Hood  v.  Tel.  Co.,  47  S.  E.  E.  (N.  C),  607,  the 
Court  ruled  that  a  telegraph  company  failing  to  make  any  attempt 
to  deliver  a  message,  because  the  person  to  whom  it  was  addressed 
resided  beyond  the  free  delivery  limits,  and,  also,  failing  to  notify 
the  sender,  or  of  its  refusal  to  deliver,  is  liable  in  damages  result- 
ing from  its  negligence  in  not  making  the  delivery. 

1  Compare  Bullard  v.  American  Exp.  Co.,  supra,  p.  lOi. 
1  Part  of  the  opinion  is  omitted. —  Ed. 


206  RIGHT   TO    MAKE    RULES    FOR    SERVICE.  [CHAP.    III. 

In  the  case  of  Gainey  v.  Tel.  Co.,  48  S.  E.  E.  (N.  C),  653,  the 
Court  says :  "  It  is  undoubtedly  true,  as  argued  by  the  learned 
counsel  for  the  plaintiff,  that  the  company  is  not  exempt  from 
liability,  merely  because  the  person  addressed  may  chance  to  live 
outside  its  free  delivery  limits;  because  it  undertakes  expressly, 
and  by  the  very  terms  of  its  contract,  to  make  a  delivery  within 
those  limits,  free  of  any  charge,  and,  impliedly  at  least,  to  deliver 
beyond  the  fixed  limits;  for  which  latter  service  an  extra  charge 
is  made,  not  exceeding  in  amount  the  actual  cost  of  such  special 
delivery.  The  language  of  the  contract  in  this  respect  is  as  follows : 
'  messages  will  be  delivered  free  within  the  established  free  deliv- 
ery limits  of  the  terminal  office.  For  delivery  at  a  greater  dis- 
tance a  special  charge  will  be  made  to  cover  the  cost  of  such  de- 
livery.' We  have  held  that  when  a  message  is  received  at  a  termi- 
nal office,  to  which  it  has  been  transmitted  for  delivery,  to  the 
person  addressed,  it  is  the  duty  of  the  company  to  make  diligent 
search  to  find  him,  and  if  he  cannot  be  found,  to  wire  back  to  the 
office  from  which  the  message  came  for  a  better  address;  and, 
likewise,  it  is  the  duty  of  the  company,  when  it  has  discovered 
that  the  person  for  whom  the  message  is  intended  lives  beyond  its 
free  delivery  limits,  either  to  deliver  it  by  a  special  messenger, 
or  to  wire  back  and  demand  payment,  or  a  guaranty  of  payment,  as 
it  may  choose  to  do,  of  the  charge  for  the  special  delivery;  and  if 
it  fails  to  deliver  without  demanding  and  being  refused  payment 
of  charge,  it  will  be  liable  for  its  default." 

We  do  not  regard  this  language  as  conflicting  with  our  inter- 
pretation of  said  clause  of  the  contract,  which  is,  that  the  com- 
pany must  undertake  to  deliver  a  message  to  one  outside  the  free 
delivery  limits  if  upon  notice  the  sender  pays  for  such  delivery, 
provided  such  person  lives  within  a  reasonable  distance  from  the 
office  of  delivery.  The  language  of  the  foregoing  case  as  con- 
strued by  us  is  a  correct  interpretation  of  the  contract.^ 


HEWLETT  V.  WESTERN  UNION  TELEGEAPH  CO. 

28  Fed.   181.     1886.^ 

Hammond,  J.  The  plaintiff,  being  transiently  in  the  city  of 
Memphis,  sent  from  his  hotel  to  the  defendant  company's  office, 
with  sufficient  money  to  pay  for  it,  the  following  message,  to  be 
transmitted  by  telegraph: 

2  See  Western  U.  T.  Co.  v.  Cain  (1&07),  40  S.  W.  (Tex.)  624;  Bright  v. 
Western  U.  T.  Co.   (1903),  132  N.  C.  317. 

1  One  paragraph  of  the  opinion  is  omitted. —  Ed. 


EIGHT    TO    MAKE   RULES    FOR   SERVICE.  207 

"  1  P.  M.,  Gaston's,  Memphis,  December  16,  1881. 
"  To  R.  0.  Bean,  Leighton,  Ala.:    Will  leave  to-night.     Will  you 
wait  for  me  ?  T.  G.  Hewlett." 

The  errand  boy  was  told  by  the  company's  clerk  that  it  would  not 
be  received  without  an  additional  sum  of  money  to  pay  for  the 
answer,  and,  not  having  that,  he  returned  to  the  hotel,  and  the 
message  was  never  sent,  the  plaintiff  not  having  "been  informed 
of  defendant's  refusal  to  take  it  until  it  was  too  late  to  take  the 
train.  He  sues  for  damages,  and  proves  that  he  and  one  Bean 
were  engaged  in  a  joint  enterprise  to  capture  a  fugitive  from  jus- 
tice, for  whose  arrest  there  was  a  reward  to  be  had  of  $1,600, 
which  Bean  received,  and  refused  to  share  with  plaintiff  because 
he  did  not  come  to  help.  His  failure  to  go  he  attributed  to  his 
failure  to  receive  an  answer  to  his  message,  and  he  claims  com- 
pensation, to  the  extent  of  his  share  of  the  reward,  from  the  de- 
fendant, for  its  refusal  to  transmit  it. 

The  company  justifies  under  its  regulations  on  that  subject,  which 
it  insists  are  reasonable.     They  are  as  follows : 

"  (11)  All  messages,  except  answers,  or  covered  by  franks,  must 
be  prepaid,  unless  guarantied  by  responsible  parties.  Messages  on 
the  business  of  the  party  sending,  and  answers  to  collect  messages, 
must  invariably  be  prepaid.  Messages  addressed  to  hotels,  or  to 
parties  absent  from  home,  must  be  prepaid  in  all  cases,  unless  they 
are  answers  to  messages  marked  '  answer  prepaid.' 

"  (12)  Transient  persons  sending  messages  which  require  an- 
swers must  deposit  in  advance  an  amount  sufficient  to  pay  for  a 
reply  of  10  words.  In  such  cases  the  signal  '  33  '  will  be  sent  with 
the  message,  signifying  that  the  answer  is  prepaid." 

The  only  case  cited  by  counsel,  and  they  say  that  it  is  the  only 
one  directly  in  point  as  to  the  reasonableness  of  these  rules  in 
their  relation  to  the  deposit  of  money  to  pay  for  the  expected 
answer  by  transient  persons,  is  that  of  W.  U.  Tel.  Co.  v.  McGuire, 
104  Ind.  130,  S.  C.  2  N.  E.  Rep.  201,  where  it  was  held  to  be  rea- 
sonable, and  I  am  of  the  same  opinion.  I  am  not  entirely  satisfied 
with  the  grounds  of  that  judgment ;  for  it  seems  to  me  to  place  the 
ruling  too  entirely  upon  a  mere  question  of  etiquette  between  the 
parties  to  the  correspondence.     The  court  says : 

"  A  person  who  sends  another  a  message,  and  asks  an  answer, 
promises,  by  fair  and  just  implication,  to  pay  for  transmitting  the 
answer.  It  is  fairly  inferable  that  the  sender  who  asks  an  answer 
to  his  message  will  not  impose  upon  the  person  from  whom  he  re- 
quests the  answer  the  burden  of  paying  the  expense  of  its  trans- 
mission.    The  telegraph  company  has  a  right  to  proceed  upon  this 


208  RIGHT   TO   MAKE   RULES   FOR   SERVICE.  [CHAP.    III. 

natural  inference,  and  to  take  reasonable  measures  for  securing 
legal  compensation  for  its  services." 

This  may  be  true,  if  we  assume  that  the  subject-matter  of  the 
message  concerns  the  business  of  the  sender,  and  that  only,  and 
not  at  all  the  business  of  the  addressee.  Then  it  would  be  the 
rule  of  social  etiquette,  of  course,  as  it  is  if  one  writes  a  letter 
strictly  on  his  own  business  to  inclose  a  postage  stamp  for  the 
reply.  But  there  is  great  force  in  the  argument  of  plaintiff's  coun- 
sel that  it  is  none  of  the  telegraph  company's  business  to  enforce 
rules  of  social  courtesy  like  that;  and  since  it  cannot  know  whetlier 
there  will  be  any  reply,  or  whether,  if  there  be,  the  circumstances 
may  not  be  such  that  the  sender  of  the  answer  should  himself  pay 
for  it,  and  be  anxious  and  willing  to  do  so,  the  company  should 
not  refuse  to  send  the  original  message,  if  it  be  paid  for.  He 
likened  it  to  a  regulation  of  a  carrier  of  passengers  refusing  to 
transport  a  passenger  at  regular  rates,  unless  he  should  buy  a 
return  ticket.  And  I  take  it  that  in  an  equal  number  of  cases 
the  relation  of  the  parties  may  be  such  that  the  sender  might  rea- 
sonably expect  and  demand,  notwithstanding  the  social  rule  of 
courtesy  above  referred  to,  that  his  correspondent  should  pay  for 
the  answer,  and  that  in  an  equal  number  of  cases  he  does  do  so. 
In  many  other  cases,  when  the  original  message  is  solely  about  his 
own  business,  the  sender  may  reasonably  hope  and  expect  the  an- 
swer to  be  paid  for  by  the  other  party.  Again,  often  a  transient 
person  in  distress,  and  with  redduced  funds,  might  wish  to  rely 
on  the  other  party  to  pay  for  the  answer;  and  since  the  company 
may  protect  itself  by  refusing  to  take  the  answer  without  prepay- 
ment by  its  sender,  it  would  seem  an  unreasonable  hardship,  under 
those  circumstances,  to  demand  that  he  pay  for  both  messages  in 
advance.  Or  he  might  wish  to  go  away  to  receive  the  answer,  or 
to  receive  it  over  another  line,  or  at  another  place,  etc. ;  and  so, 
under  many  imaginable  circumstances,  be  reasonably  exempt  from 
the  burden  of  depositing  money  in  advance  for  a  message  he  may 
never  receive,  and  find  it  inconvenient  and  expensive  to  get  back 
his  deposit.  Hence,  take  it  altogether,  I  should  not  support  the 
reasonableness  of  this  regulation  wholly  on  the  ground  of  the 
sender's  obligation  to  pay  for  the  answer.  He  may  very  often  be 
not  so  obliged,  and  that  is  an  answer  to  it. 

But  I  think  this  regulation  is  a  reasonable  one,  notwithstanding 
the  force  of  the  plaintiff's  attack  on  this  Indiana  case.  It  should 
not  be  segregated  from  the  other  regulations  of  the  company  on 
the  subject  of  collecting  the  tolls,  and  tested  by  itself  alone,  on  the 
reasoning  of  plaintiff's  argument,  as  above  set  forth.  This  is  only 
one  regulation  of  a  carefully  devised  system  for  securing  payment 


RIGHT    TO    MAKE    RULES    FOR    SERVICE,  209 

of  tolls,  consistently  with  enlarged  accommodation  of  the  public 
in  allowing  the  customers  of  defendant  to  regulate  among  them- 
selves this  very  matter  of  adjusting  the  burden  of  these  tolls.  I 
have  quoted  in  the  statement  of  facts  the  entire  regulations  on 
the  subject,  as  I  find  them  printed,  italics  and  all,  and  an  analysis 
of  them  shows  that  the  company  is  endeavoring  to  accommodate  the 
public  as  much  as  possible  in  this  matter.  It  might  reasonably, 
as  the  railroads  do  as  to  passenger  fares,  demand  prepayment  by 
the  sender  of  all  messages,  whether  they  be  originals  or  answers. 
But  it  does  not  do  this.  It  allows  answers  to  be  sent  at  the  ex- 
pense of  the  person  whose  message  is  answered,  and  this  is  a  priv- 
ilege and  a  benefit  it  seeks  to  confer  on  the  original  sender  by 
undertaking  to  collect  of  him  that  toll  instead  of  requiring  his 
correspondent  to  pay  it,  thereby  lessening  the  chances  of  his  an- 
swering at  all.  It  requires  all  original  messages  to  be  prepaid  or 
guarantied.  If  guarantied,  the  company  will  allow  the  sender,  if 
he  choose,  to  place  the  burden  of  the  toll  on  the  addressee, —  by 
itself  undertaking  to  collect  the  toll  of  him  in  the  first  instance, 
but  of  the  sender  at  last,  if  the  other  refuses  to  pay.  It  seeks,  as 
to  answers,  to  accommodate  the  public  in  the  same  way,  by  under- 
taking to  collect  of  the  person  addressed;  and,  as  I  understand 
the  regulations,  the  sender  of  the  answer  is  not  expected  to  pay  at 
all,  certainly  not  to  p-epay,  unless  it  be  an  answer  to  a  message 
which  has  been  sent  to  be  collected  from  himself,  or  is  sent  to 
parties  away  from  home,  or  addressed  to  hotels;  and  in  these  last- 
mentioned  cases  he  need  not  prepay  if  it  be  an  answer  to  a  message 
marked  "  answer  prepaid."  In  order  to  give  them,  their  cor- 
respondents, and  all  persons  who  are  interested  in  the  use  of  the 
\telegraph,  the  benefit  of  this  system  of  collecting  and  adjusting 
,^olls,  the  requirement  is  made  that  transient  persons  shall  pay  for 
Vthe  expected  answers  in  advance,  and  it  is  not  unreasonable,  as  a 
part  of  that  system.  It  may  be  that  a  more  liberal  rule  might  be 
devised  for  transient  persons,  and  that  this  one  operates  sometimes 
harshly  and  inconveniently;  but  that  is  not  the  question.  In  view 
of  the  whole  system,  a  court  cannot  say  that  the  power  and  discre- 
tion of  the  company  to  determine  for  itself  what  is  best  for  all 
concerned  has  been  unreasonably  exercised.  It  has  a  choice  of  its 
own  regulations,  and  the  test  of  reasonableness  is  not  whether  some 
other  would  answer  its  purposes  as  well  or  better,  but  whether  this 
is  fairly  and  generally  beneficial  to  the  company,  and  all  its  cus- 
tomers. 

Now,  I  have  said  elsewhere  that  reasonable  regulations  of  public 
corporations  like  these  must  be  reasonably  applied,  and  that  a  rule 
which  is  generally  fair  may,  under  especial  circumstances,  become 


210  BIGHT   TO   MAKE   BULES   FOB   SEBVICE.  [CHAP.   III. 

oppressive  and  unreasonable,  as  applied  in  the  particular  case ;  and 
so  these  corporations  must  exercise  ordinarily  prudent  discretion 
in  relaxing  their  regulations  in  such  cases.  If,  to  use  an  illustra- 
tion of  the  argument,  a  tramp,  with  just  money  enough  to  pay 
for  his  message,  should  so  inform  the  company,  and  ask  to  have 
it  transmitted,  and  take  pay  for  the  answer  from  its  own  sender, 
and  this  should  be  refused,  it  may  be  that  the  company  would  be 
liable:  but  I  should  think  that,  imder  these  regulations,  there 
would  be  in  such  ease  no  refusal,  and  that  almost  any  intelligent 
operator,  when  so  informed,  would  take  the  message.  No  such  a 
case  is  shown  here.  The  plaintiff  was  neglectful  in  not  looking 
after  his  message  sooner  than  he  did,  and  he  was  not  a  tramp,  or 
destitute  of  funds  to  deposit  for  the  answer. 

Judorment  for  defendant. 


HATCH  l:  COXSUMEES  CO. 
17  Idaho,  204.     19<)0.^ 

AiLSHiE,  J.  This  is  an  original  action  commenced  in  this  court, 
praying  for  the  issuance  of  a  writ  of  mandate  against  the  defendant 
corporation,  requiring  and  commanding  that  it  connect  plaintiff's 
water  pipes  with  defendant's  water  system. 

We  have  heretofore  held  in  Bothwell  v.  Consimiers  Company, 
13  Idaho,  568,  92  Pac.  533,  and  Pocatello  Water  Co.  v.  Standley,  7 
Idaho,  155,  61  Pac.  518,  that  the  mains  and  laterals  laid  within 
the  streets  and  alleys  are  the  property  of  the  water  company,  and 
that  the  franchise  granted  such  company  authorizes  it  to  dig  in  the 
streets  and  alleys  and  use  and  occupy  them  for  the  purpose  of 
laying  and  maintaining  their  pipe-lines  and  delivering  water  to 
consumers.  We  discover  no  reason  for  departing  from  the  rule 
announced  in  those  cases.  (See,  also,  section  2840,  Eev.  Codes.) 
On  the  other  hand,  the  consumer  has  no  right  or  franchise  to  ex- 
cavate the  streets  or  to  lay  or  maintain  pipes  therein.  When  he 
undertakes  to  pass  beyond  his  property  line  with  pipes,  he  is  met  by 
the  public  authorities  and  the  franchise  held  by  the  water  company. 
He  is  in  no  position  to  acquire  a  property  right  in  the  streets  and 
alleys  by  laying  pipes  therein.  The  water  company,  on  the  con- 
trary, is  clothed  with  this  power  and  right  and  all  the  necessarv' 
authority  for  creating  and  estabKshing  property  rights  therein  and 
the  protection  of  such  property.  There  is  no  reason  in  saying  that 
the  company  has  no  interest  in  laterals  it  may  lay  in  the  streets 
from  its  main  to  the  line  of  abutting  property  owners.     These  later- 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion 
are  omitted. —  Ed. 


RIGHT    10    lULKZ    27115    r»»    SZHTICZ.  211 

als  are  of  just  as  nmch  nse  and  a=  Til-£":lr  ::•  ihe  c-rmi^aiiT  a=  it? 
mains  in  proportion  to  the  amoiini  of  "s-ai-er  ::  i-e  drliTerei  'iri-gja 
snch  laterals  as  compared  witli  that  delivered  thTongh  ilc  niin. 
The  only  di5erenoe  whatever  is  in  the  extent  of  the  service  The 
capacity  of  a  main  is  ordinarily  SQch  that  it  wiU  supply  a  larg^e 
mimber  of  consumers  along  the  street  ::  7   t 

capacity  of  a  lateral  is  ordinarily  snch  ll_:  _  _.     ;_^   .     .li 

or  two  c-onsnmers.     The  relative  value  to  ihe  17  of  the  main 

and  latejals  is  measured  by  the  estent  of  the  semz-e  :  . 

The  necessity,  however,  for  one  is  just  as  great  2?  : 
Without  a  main  none  of  the  residents  along  a  j  - 

plied.     Without  a  lateral  the  indivi:  r  ~r  ,     . 

plied.     The  law  of  ownership  is  thr  t 

other,  and  the  right  of  pr^r  is  the  - 

instance.     Water  companies _:___      _.,:'>-  r*  -  r 

of  collecting  rates  and  toils.     They  operai-  _  l 

order  to  c-oUect  tolls,  they  must  deliver  water.  i. 

the  other  hand,  pays  his  money  for  servf:-?.     T^  -   -         _. 

there  is  nothing  for  which  he  may  be  ~. 

We  are  aware  that  some  c^i^urts  „^.r  _t  -- — :t 

may  be  required  to  pay  the  expenses  of  **  s-:  ; 

it  is  sometimes  called,  or,  rather,  for  laterals  ez 

curb  line  to  tiie  main.     So  far  as  we  have  been  -  -.        .— . 

however,  these  decisions  are  based  upon  express  staruTes.     There 

is  a  line  of  decisions  to  that  effect  in  Wisconsin.     Tlt  :' 

Gleason  r.  Waukesha  County.  103  Wis.  225,  T9  X.  W 

leading  authority  on  this  point,  and  holds  that  the  ez 

ing  water  pipes  from  the  curb  line  tc     r^ :  -  —  -  -  - 

properly  assessed  against  the  proper:  . 

this  is  based  upon  the  express  provisior     : 

authorizing  the  levying  of  assessments  ^_^-:  - 

owners  for  such  purposes  ~  whenever  the  e: 

paving  or  re-paving  of  any  street  ir.     " 

sewer  or  either  of  them  shall  hs^f 

strueted."^    In  that  c^ase  it  was  that  the  statute  was  r^- 

constitutionaL,  in  tr:"    ~    "'  T^r  ''  T»TC>peny  wiir::~: 

due  pixxTess  of  law.  :e  on  the  grccni 

that  the  laving  of  :       _   -  ..s  an  impirovement  to 

the  property  of  ti,    ;.-:._.    .    __--.  ''  ^i  it  eonferred  a 

benefit-     We  know  of  no  ease,  however.  >  held  to  saeh  a 

rule  in  iflie  absence  of  a  statute  or  :   '  -Tig  and  poro- 

viding  for  levying  an  assessment  for  f 

2  C<vmT>ape  State  r.  Ha]3j-ard  Wat«-  Oa.  (ISNJtS  t,  *i»  Wa^  2S1        "" 
See  State  r.  Seattle  Tjgttmg  0».  <1910*,  <90  Wask.  SL 


CHAPTER  IV. 
EATES. 

Section  1. 
Eates  Fixed  by  the  One  Engaged  in  Public  Seevice. 

INTEKNATIONAL  BEIDGE  CO.  v.  CANADA  SOUTHERN 

RAILWAY  CO. 

7  Ontario  App.  226.     1882.^ 

Spkagge,  C.  J.  The  suit  of  the  bridge  company  is  for  the  re- 
covery of  tolls  between  the  31st  of  October,  1877,  and  the  31st  of 
December,  1878 ;  and  the  decree  declares  that  the  railway  company 
is  liable  to  pay  to  the  bridge  company  tolls  for  the  use  of  the  bridge 
at  the  rate  settled  by  the  directors  of  the  bridge  company,  namely : 
—  And  the  decree  then  sets  out  the  rates,  which  it  declares  the  rail- 
way company  liable  to  pay;  and  refers  it  to  the  Master  to  take  an 
account  of  the  amount  due  in  respect  of  such  user  of  the  bridge 
from  the  earlier  to  the  later  of  the  above  dates,  having  regard  to 
the  declaration  contained  in  the  decree,  with  interest;  and  orders 
payment  of  the  amount  to  be  found  due  by  the  Master.  The  de- 
cree contains  no  declaration  or  order  in  respect  of  tolls  accruing  due 
after  the  later  of  the  above  dates.  It  is  no  res  judicata  as  to 
anything  subsequent  to  31st  December,  1878;  and  is  not  in  any 
shape  binding  upon  the  railway  company  as  to  anything  subse- 
quent to  that  date. 

In  the  suit  in  which  the  railway  company  are  plaintiffs  and 
the  bridge  company  defendants,  the  same  points  are  raised  as  in 
this  suit,  and  the  two  were  argued  together. 

Mr.  Crooks  conceded  that  it  was  incident  to  the  corporate  pow- 
ers of  the  bridge  company  to  require  payment  of  tolls  from  rail- 
way companies  for  the  user  of  the  bridge,  and  to  fix  the  amount  of 
tolls  to  be  paid  for  such  user. 

But  Mr.  Crooks,  while  conceding  to  the  bridge  company  the 
possession  of  power  to  fix  tolls,,  contends  that  this  power  is  quali- 

1  Part  of  the  opinion  is  omitted. —  Ed. 


SEC.   I.]  RATES    FIXED   BY    PUBLIC    SERVICE    COMPANY.  213 

fied  by  the  implied  condition,  that  the  tolls  fixed  must  be  reason- 
able; and  the  ground  upon  which  he  bases  this  contention,  is  that 
the  franchise  of  the  compan}^,  and  the  structure  built  and  used 
under  and  in  pursuance  of  their  franchise,  are  publici  juris;  and 
Mr.  Crooks  cites  high  authority  for  his  position.  He  refers  among 
other  authorities  to  Lord  Hale's  treatise  De  Jure  Maris;  and  the 
treatise  of  the  same  learned  writer  De  Portihus  Maris,  to  Mr.  Jus- 
tice Strong's  observations  upon  the  nature  of  a  franchise  and  struc- 
ture of  a  similar  character  in  The  Attorney-General  v.  The  Niagara 
Falls  Suspension  Bridge  Company,  20  Gr.  34,  490;  to  Allnut  v. 
Inglis,  12  East  527,  the  London  Docks  wine  case,  and  which  is 
referred  to  in  the  learned  and  elaborate  judgment  of  C.  J.  Waite  in 
the  case  of  Munn  v.  Illinois,  4  Otto  113.  We  are  also  referred  to 
the  language  of  Mr.  Justice  Blackburn  in  the  case  in  the  Lords 
of  the  Great  Western  Eailway  Co.  v.  Sutton,  L.  E.  4  H.  L.  236. 
The  earlier  portion  of  the  learned  Judge's  answer  to  the  question 
propounded  by  the  House  is  apposite  to  this  point.- 

The  question  is  a  very  interesting  one;  but  our  decision  in  his 
favour  would  not  help  Mr.  Crooks  in  this  case,  unless  he  is  able  to 
show  not  only  that  the  tolls  fixed  by  the  company  must  be  reason- 
able, but  that  they  are  in  fact  otherwise  than  reasonable. 

The  parties  differ  widely  as  to  the  dividend  yielded  by  the  tariff 
of  charges.  Mr.  Crooks  makes  it  (reducing  the  capital  by  the 
items  he  objects  to)  about  17  per  cent.  Mr.  Cassels,  on  the  other 
hand,  taking  the  capital  at  two  millions,  makes  the  dividend  not  to 
exceed  8  per  cent,  if  spread  over  the  whole  period  since  the  comple- 
tion of  the  bridge,  or,  taking  the  year  1878  by  itself,  not  to  exceed 
10  per  cent. 

Beading  the  evidence  of  Mr.  Gzowski,  and  the  very  interesting 
narrative  that  it  contains  of  the  obstacles  and  difficulties  en- 
countered in  the  construction  of  the  bridge,  and  the  skill  and  perse- 
verance with  which  he  met  and  surmounted  them,  the  evidence  of 
Mr.  Brydges,  who  was  president  of  the  company  during  its  con- 
struction, and  until  the  summer  of  1874,  and  the  evidence  of  Mr. 
Hannaford,  the  company's  engineer  then  and  ever  since,  one  cannot 
fail  to  see  that  it  is  impossible  to  predicate  of  this  bridge  an  im- 
munity from  disaster.     So  far  as  skilful  ^nd  conscientious  work 

2  In  this  case  Mr.  Justice  Blackburn  says  in  part :  "  The  obligation 
which  the  common  law  imposed  upon  him  [a  common  carrier]  was  to  accept 
and  carry  all  goods  delivered  to  him  for  carriage  according  to  his  profession 
(unless  he  has  some  reasonable  excuse  for  not  doing  so)  on  being  paid  a 
reasonable  compensation  for  so  doing ;  and  if  the  carrier  refused  to  accept 
such  goods,  an  action  lay  against  him  for  so  refusing:  and  if  the  customer 
in  order  to  induce  the  carrier  to  perform  his  duty.  paid,  under  protest,  a 
larger  sum  than  was  reasonable,  he  might  recover  back  the  surplus  beyond 
what  the  carrier  was  entitled  to  receive,  in  an  action  for  money  had  and 
received  as  being  money  extorted  from  him." 


214  KATES.  [chap.   IV. 

could  give  it  permanence,  no  one  can  doubt  that  it  has  it;  but 
Mr.  Brydges  says  that  no  other  bridge  that  he  had  seen,  compared 
with  this  one  in  point  of  danger  and  risk.  One  of  my  learned 
brothers  referred  to  the  Tay  bridge,  which,  since  Mr.  Brydges  gave 
his  evidence,  has  been  swept  away.  It  was  regarded  as  a  monument 
of  engineering  skill,  but  its  destruction  has  shewn  that  the  elements 
are  more  powerful  than  any  work  of  man,  and  the  International 
bridge  is  certainly  exposed  to  not  less  danger  than  was  the  bridge 
across  the  Tay. 

To  speak  of  six  per  cent,  upon  capital  laid  out  in  such  an  en- 
terprise, is  most  unreasonable.  It  is  not  necessary  to  say  what  we 
should  think  reasonable.  But  assuming  it  to  be  competent  to  the 
Courts  to  say  when  the  point  of  unreasonableness  has  been  reached, 
and  to  relieve  against  overcharge ;  we  are  unable  to  say  that  in  this 
case  that  point  was  reached  during  the  period  with  which  we  have 
to  deal  in  this  case. 

In  my  opinion,  the  decree  is  right.  It  may  be  that  the  railway 
company  failing  in  the  principal  object  of  their  bill,  may  not  care 
to  take  the  reference  which  the  decree  gives  them.^ 

3  When  the  case  was  affirmed  in  the  House  of  Lords,  sub  nom.  Canada 
Southern  Railway  Co.  v.  International  Bridge  Co.  (18S3),  8  App.  Cas.  723, 
The  Lord  CiiAisfCELLOR  (Earl  of  Selborne)  said  with  regard  to  the  rates: 

"  It  certainly  appears  to  their  Lordships  that  the  principle  must  be.  when 
reasonableness  comes  in  question,  not  what  profit  it  may  be  reasonable  for 
a  company  to  make,  but  what  it  is  reasonable  to  charge  to  the  person  who  is 
charged.  That  is  the  only  thing  he  is  concerned  with.  They  do  not  say 
that  the  case  may  not  be  imagined  of  the  results  to  a  company  being  so 
enormously  disproportionate  to  the  money  laid  out  upon  the  undertaking  as 
to  make  that  of  itself  possibly  some  evidence  that  the  charge  is  unreason- 
able, with  reference  to  the  person  against  whom  it  is  charged.  But  that  is 
merely  imaginary.  Here  we  have  got  a  perfectly  reasonable  scale  of  charges 
in  everything  which  is  to  be  regarded  as  material  to  the  person  against 
whom  the  charge  is  made.  One  of  their  Lordships  asked  Counsel  at  the  bar 
to  point  out  which  of  these  charges  were  unreasonable.  It  was  not  found 
possible  to  do  so.  In  point  of  fact,  every  one  of  them  seems  to  be,  when 
examined  with  reference  to  the  service  rendered  and  the  benefit  to  the  person 
receiving  that  service,  perfectly  unexceptionable,  according  to  any  standard 
of  reasonableness  which  can  be  suggested.  That  being  so,  it  seems  to  then- 
Lordships  that  it  would  be  a  very  extraordinary  thing  indeed,  unless  the 
Legislature  had  expressly  said  so,  to  hold  that  the  persons  using  the  bridge 
could  claim  a  right  to  take  the  whole  accounts  of  the  company,  to  dissect 
their  capital  account,  and  to  dissect  their  income  account,  to  allow  this  item 
and  disallow  that,  and,  after  manipulating  the  accounts  in  their  own  way, 
to  ask  a  Court  to  say  that  the  persons  who  have  projected  such  an  under- 
taking as  this,  who  have  encountered  all  the  original  risks  of  executing  it, 
who  are  still  subject  to  the  risks  which  from  natural  and  other  causes  every 
such  undertaking  is  subjecf  to,  and  who  may  possibly,  as  in  the  case  alluded 
to  by  the  learned  Judge  in  the  Court  below,  the  case  of  the  Tay  Bridge, 
have  the  whole  thing  swept  away  in  a  moment,  are  to  be  regarded  as  mak- 
ing unreasonable  charges,  not  because  it  is  otherwise  than  fair  for  the  rail- 
way company  using  the  bridge  to  pay  those  charges,  but  because  the  bridge 
company  gets  a  dividend  which  is  alleged  to  amount,  at  the  utmost,  to  15 
per  cent.  Their  Lordships  can  hardly  characterise  that  argument  as  any- 
thing less  than  preposterous." 


SEC.    I.]  RATES    FIXED   BY    PUBLIC    SERVICE    COMPANY.  215 

TIFT  et  al.  v.  SOUTHERN  RAILWAY  CO.  et  al. 
10  I.  C.  C.  R.  548.     1905.^ 

On  June  23,  1903,  the  defendant  railroads  put  into  effect  an 
advance  of  2  cents  per  100  pounds  on  lumber.  The  plaintiffs 
prayed  that  the  defendants  be  ordered  to  cease  from  enforcing  the 
advance  in  rates,  and  for  other  relief. 

Clements,  Commissioner.  The  defendants  do  not  attempt  to 
justify  the  advance  on  the  ground  that  the  previous  rate  was  un- 
remunerative.  The  justifications  set  up  are  consistent  with  re- 
munerativeness  of  that  rate.  In  their  answer  they  allege,  among 
other  things,  that,  if  the  advance  is  not  allowed,  "the  result  will 
be  to  prevent  the  respondents  and  other  railroads  in  the  South 
from  sharing  to  any  extent  whatever  in  the  phenomenal  prosperity 
of  the  business  in  the  regular  grades  of  lumber." 

The  lumber  business,  it  is  true,  has  grown  from  its  inception, 
but  the  proof  does  not  show  that  for  the  two  or  three  years  preced- 
ing the  advance  the  prices  of  the  mill  products  had  materially  in- 
creased or  that  the  profits  realized  on  the  business  were  phenomenally 
large.  (Finding  8.)  However  that  may  be,  it  is  clear  that,  if  a 
rate  on  an  article  of  traffic  is  already  remunerative,  the  increased 
prosperity  of  the  business  of  manufacturing  that  article  is  no  ground 
for  an  advance  of  the  rate.  The  claim  to  the  contrary  on  the  part 
of  the  carriers  is  based  upon  the  erroneous  assumption,  so  preva- 
lent among  traffic  managers  that  a  rate  may  be  made  high  as 
"  the  traffic  will  bear."  On  this  point  we  quote  what  was  said  by 
us  in  the  case  of  The  Central  Yellow  Pine  Association  v.  Illinois 
Central  Railroad  Company,  et  al.  (ante,  5G1). 

"The  test  of  the  reasonableness  of  a  rate  is  not  the  amount  of 
the  profit  in  the  business  of  a  shipper  or  manufacturer,  but  whethei; 
the  rate  yields  a  reasonable  compensation  for  the  services  rendered.J 
If  the  prosperity  of  the  manufacturer  is  to  have  a  controlling  in- 
fluence, this  would  justify  a  higher  rate  on  the  traffic  of  the  pros- 
perous manufacturer  than  on  that  of  one  less  prosperous.  The 
right  to  participate  in  the  prosperity  of  a  shipper  by  raising  rates 
is  simply  a  license  to  the  carrier  to  appropriate  that  prosperity,  or 
in  other  words,  to  transfer  the  shipper's  legitimate  profit  in  his 
business  from  the  shipper  to  the  carrier." 

The  carriers  necessarily  and  justly  participate  in  the  increased 
prosperity  of  their  patrons  in  the  resultant  enlargement  of  their 
own  business.     This  appears  to  be  the  case  with  these  defendants 

1  The  statement  of  facts  is  omitted,  and  a  short  statement  of  the  point  in 
controversy  is  substituted.     Part  of  the  opinion  is  also  omitted. —  Ed. 


216  RATES.  [chap.    IV. 

as  the  tonnage  of  lumber  shipped  over  their  lines  and  their  revenue 
therefrom  have  steadily  grown  in  amount.  Take  the  two  years, 
1901  and  1902,  immediately  preceding  the  present  advanced  rate, 
and  1903  the  year  of  the  advance;  the  lumber  tonnage  of  de- 
fendants has  grown  in  those  years  from  6,566,407  tons  in  1901,  to 
9,808,463  tons  in  1903,  an  increase  of  3,242,056  tons.  (Finding  9.) 
The  business  of  the  defendants,  not  only  in  lumber,  but  in 
traffic  in  general,  has  grown  and  is  growing  largely,  and  in  view 
of  the  fact,  that  they  derive  their  franchises,  or  "  right  to  exist " 
from  the  public,  the  lumber  shippers,  as  part  of  the  public,  might 
plausibly,  to  say  the  least,  claim  that  they  have  a  right  to  partici- 
pate in  the  prosperity  of  the  defendants  by  having  their  rate  re- 
duced rather  than  advanced.  The  general  rule  is,  the  greater  the 
tonnage  of  an  article  transported,  the  lower  should  be  the  rate. 
No  rule  is  more  firmly  grounded  in  reason  or  more  universally 
recognized  by  carriers.  It  is  because  of  the  greater  density  of 
traffic  north  of  the  Ohio  River  in  Central  Freight  Association 
Territory  and  in  the  Eastern  Territory  that  rates  in  general  are 
made  materially  lower  in  those  territories  than  in  Southern  Terri- 
tory. 

As  before  stated,  the  advance  in  the  rate  is  not  sought  to  be 
justified  on  the  ground  that  the  rate  in  force  was  unremunera- 
tive  or  not  a  reasonable  return  for  the  service  rendered.  The  prin- 
cipal ground  urged  is  that  additional  revenue  was  needed  to  meet 
increased  expenses  and  that,  in  the  language  of  one  of  the  princi- 
pal witnesses  for  the  defendant,  they  "  looked  around  to  see  where 
they  could  best  get  that  additional  revenue  and  one  of  the  com- 
modities which  they  thought  would  bear  the  advance  was  lumber." 
Carriers  have  no  right  to  advance  a  rate  which  is  already  rea- 
sonably high  and  which  yields  an  adequate  return  for  the  service 
rendered,  solely  because  additional  revenue  is  needed.  In  Smyth 
V.  Ames  (169  U.  S.  547,  42  L.  ed.  849,  18  Sup.  Ct.  Rep.  418),  the 
Supreme  Court  held  that  "the  public  is  entitled  to  demand  that 
no  more  be  exacted  from  it  for  the  use  of  a  public  highway  than  the 
services  rendered  by  it  are  reasonably  worth."  ..."  It  cannot 
therefore  be  admitted  that  a  railroad  corporation  maintaining  a 
highway  under  the  authority  of  a  state  may  fix  its  rates  with  a 
view  solely  to  its  own  interests  and  ignore  the  rights  of  the  public." 
In  Covington  &  Lexington  Turnpike  Road  Co.  v.  Sandford  (164 
TJ.  S.  596,  597,  41  L.  ed.  566,  17  Sup.  Ct.  Rep.  198),  it  is  said: 
A  corporation  "  is  not  entitled,  as  of  right  and  without  reference 
to  the  interests  of  the  public,  to  realize  a  given  per  cent,  upon  its 
capital  stock.  .  .  .  Stockholders  are  not  the  only  persons  whose 
rights  or  interests  are  to  be  considered.     The  rights  of  the  public 


SEC.    I.]  RATES    FIXED   BY    PUBLIC    SERVICE    COMPANY.  217 

are  not  to  be  ignored.  .  .  .  The  public  cannot  properly  be  sub- 
jected to  unreasonable  rates  in  order  simply  that  stockholders  may 
earn  dividends." 

It  is  clear,  therefore,  that  the  mere  fact  of  the  need  of  additional 
revenue  to  meet  increased  expense  does  not  justify  the  advance  in 
the  rate  on  lumber.^ 


BRUNSWICK   AND    TOPSHAM   WATER   DISTRICT  v, 
MAINE  W^ATER  CO. 

99  Me.  371.     1904.^ 

Savage,  J.  We  turn  to  the  other  question  involved  in  this  re- 
quest. That  relates  to  the  assumed  existence  of  a  nearer  and 
cheaper  source  of  supply  than  the  one  now  in  use  by  the  company, 
which  is  a  part  of  its  present  entire  plant,  and  which  in  part  repre- 
sents its  actual  investment.  We  do  not  doubt  that,  when  the  worth 
of  a  public  service  of  this  kind  to  the  public  or  the  customers  is 
spoken  of,  necessarily  one  of  the  elements  to  be  considered  is  the 
expense  at  which  the  public  or  customers,  as  a  community,  might 
serve  themselves  were  they  free  to  do  so,  and  were  it  not  for  the 
existence  of  the  practically  exclusive  franchises  of  the  supplying 
company.  When  the  worth  of  the  water  to  a  consumer  is  esti- 
mated, we  are  not  limited  to  the  value  of  water  itself,  for  it  is  an 
absolute  necessity.  Its  value  has  no  limit.  Water,  speaking  ab- 
stractly, is  priceless;  it  is  inestimable.  To  sustain  life  it  must 
be  had  at  any  price.  And  in  this  respect  a  public  water  service 
differs  from  all  other  kinds  of  public  service.  In  estimating  what 
it  is  reasonable  to  charge  for  a  water  service,  that  is,  not  exceed- 
ing its  worth  to  the  consumers,  water  is  to  be  regarded  as  a 
product,  and  the  cost  at  which  it  can  be  produced  or  distributed  is 
an  important  element  of  its  worth.  It  is  not  the  only  element, 
however.  The  individuals  of  a  community  may  with  reason  prefer 
to  pay  rates  which  yield  a  return  to  the  money  of  other  people 
higher  than  the  event  shows  they  could  serve  themselves  for,  rather 
than  make  the  venture  themselves,  and  risk  their  own  money  to 
lose  in  an  uncertain  enterprise.  It  was  said  by  us  in  the  Waterville 
case  that  the  investor  is  entitled  to  something  for  the  risk  he  takes, 
and  it  is  not  unreasonable  for  the  consumer  to  be  charged  with 
something  on  that  account.  That  is  one  of  the  things  which  make 
up  the  worth  of  the  water  to  the  customer.     The  same  element  enters 

2  For  a  full  history  of  this  case  see,   also,   123  Fed.  789,   138  Fed.   758, 
148  Fed.  1021,  and  206  U.  S.  428. 

1  Only  one  point  is  reprinted  from  the  opinion. —  Ed. 


218  RATES.  [chap.    IV. 

always  into  the  relations  between  producer  and  consumer.  But 
such  a  consideration  as  this  last  one  must  always  be  treated  with 
caution.  The  company  is  only  entitled  to  fair  returns,  in  any 
event,  and  "  fair  "  to  the  customer  as  well  as  to  itself. 

In  the  aspect  now  being  considered,  the  worth  of  a  water  service 
to  its  customers  does  not  mean  what  it  would  cost  some  one  indi- 
vidual, or  some  few  individuals,  to  supply  themselves,  for  one  may 
be  blessed  with  a  spring,  and  another  may  have  a  good  well.  It 
means  the  worth  to  the  individuals  in  a  community  taken  as  a  whole. 
It  is  the  worth  to  the  customers  as  individuals,  but  as  individuals 
making  up  a  community  of  water  takers.  In  the  very  nature  of 
things,  a  water  system  is  usually  intended  to  supply  a  somewhat 
compactly  settled  community,  or  a  community  whose  geographical 
limits  are  somewhat  restricted.  As  a  matter  of  fact,  in  this  state 
such  systems  usually  supply  villages,  or  the  more  compact  portions 
of  cities.  The  necessity  does  not  exist  for  extending  such  systems 
beyond  these  limits,  and  the  expense  would  be  practically  prohibi- 
tive. Such  a  community  must,  in  general,  stand  as  a  whole.  The 
rates  for  such  a  system  are  generally  and  properly  uniform,  although 
the  expense  of  supplying  some,  as  those  nearer  the  source  of  sup- 
ply, is  actually  less  than  that  of  supplying  those  at  the  outermost 
limits.  Still  the  benefits  are  uniform,  and  uniform  rates  are  rea- 
sonable. Now,  such  a  community  is,  we  think,  entitled  to  the  bene- 
fit of  such  natural  and  sufficient  facilities  for  procuring  pure  water 
as  exist  in  its  vicinity.  Communities  are  in  every  respect  entitled 
to  the  benefit  of  existing  natural  advantages. 

(it  therefore  seems  to  be  reasonable  that  a  public  water  service 
company  undertaking  to  supply  a  community  with  water  is  bound 
to  do  so  wisely  and  economically.  It  is  bound  to  take  advantage 
of  practicable  natural  facilities.  If  there  is  more  than  one  source 
of  supply,  other  things  being  equal,  the  community  is  entitled  to 
have  the  least  expensive  one  used.  So  long  as  the  company  enjoys 
practically  exclusive  franchises,  so  long  it  must  afford  the  com- 
munity the  benefit  of  the  conditions  which  nature  has  provided  for 
them.  For  instance,  if  water  can  profitably  be  served  from  a  nearer 
source  of  supply  at  a  certain  rate,  the  company  ought  not  to  be  per- 
mitted to  charge  a  higher  rate  based  upon  the  expense  of  bringing 
it  from  a  farther  and  more  expensive  source.  And  this  even  if  in 
attempting  to  serve  this  and  other  communities  together  it  might 
be  more  profitable  to  the  company  to  do  so.  \ 


SEC.    I.]  RATES    FIXED   BY    PUBLIC    SERVICE    COMPANY.  219 

BEYMEN  V.  BUTLER  WATER  CO. 
179  Pa.  St.  231.     1897.^ 

Mr.  Justice  Williams.  A  provision  in  the  third  section  of  the 
act  of  June  2,  1887,  relating  to  the  jurisdiction  of  the  courts  over 
gas  and  water  companies,  is  supplemental  to  the  act  of  1874,  and 
defines  somewhat  more  distinctly  the  duty  of  such  companies  to 
furnish  the  public  with  pure  gas  and  water,  but  it  contains  no  al- 
lusion to  the  subject  of  price.  The  power  of  the  court  to  interfere 
between  the  seller  arid  the  buyer  of  water  is  conferred  only  by  the 
provisions  already  quoted  from  the  act  of  1874,  and  that  act  au- 
thorizes the  court  to  entertain  the  complaint  of  the  buyer,  to  inves- 
tigate the  reasonableness  of  the  price  charged,  and  to  "  dismiss  the 
complaint,"  or  to  order  that  the  charges  complained  of,  if  found  to 
be  unreasonable  and  unjust,  "  shall  be  decreased."  The  water  com- 
pany prepares  its  schedule  of  prices  in  the  first  instance,  and  makes 
its  own  terms  with  its  customers;  but  if  these  are  oppressive,  so 
that,  in  the  exercise  of  the  visitorial  power  of  the  state,  the  just 
protection  of  the  citizen  requires  that  they  be  reduced,  then  the 
court  is  authorized  to  say :  "  This  charge  is  oppressive.  You  must 
decrease  it.  You  are  entitled  to  charge  a  price  that  will  yield  a 
fair  compensation  to  you,  but  you  must  not  be  extortionate."  This 
is  not  an  authority  to  manage  the  afi'airs  of  the  company,  but  to 
restrain  illegal  and  oppressive  conduct  on  its  part  in  its  dealings 
with  the  public.  It  may  be  that  the  power  to  order  that  any  par- 
ticular item  of  charge  shall  "  be  decreased  "  includes  the  power  to 
fix  the  extent  of  the  reduction  that  must  be  made,  or  to  name  the 
maximum  charge  for  the  particular  service  in  controversy,  which 
the  court  will  approve ;  but  the  decree  is  that  the  item  shall  "  be 
decreased  "  either  generally  or  to  a  sum  named.  The  schedule  of 
charges  must  be  revised  accordingly  by  the  company  defendant, 
and  such  revision  may  be  compelled  in  the  same  manner  that  the 
decree  of  the  same  court  may  be  enforced  in  other  cases. 

We  do  not  think  this  supervisory  power  would  justify  the  court  in 
preparing  a  tariff  of  water  rents,  and  commanding  a  corporation  to 
furnish  water  to  the  public  at  the  rates  so  fixed^  This  would  in- 
volve a  transfer  of  the  management  of  the  property  and  the  business 
of  a  solvent  corporation  from  its  owners  to  a  court  of  equity,  for  no 
other  reason  than  that  the  court  regarded  some  one  or  more  of  the 
charges  made  by  the  company  as  too  high.  The  act  of  1874  con- 
templates no  such  radical  departure  from  established  rules  as  this, 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


230  RATES.  [chap.    IV. 

but  provides  simply  for  the  protection  of  the  citizen  from  extor- 
tionate charges,  specifically  pointed  out  and  complained  of  by  pe- 
tition.^ 


Section  2. 

The  Power  of  the  State  to  Fix  Rates.^ 

CHICAGO,  BUELINGTON  AND  QUINCY  EAILEOAD  CO.  v. 

IOWA. 

^  U.  S.  155.     1876.2 

Appeal  from  the  Circuit  Court  of  the  United  States  for  the  Dis- 
trict of  Iowa. 

This  bill  was  filed  by  the  Chicago,  Burlington,  and  Quincy  Eail- 
road  Company,  a  corporation  created  by  the  laws  of  Illinois,  for 
an  injunction  restraining  the  Attorney-General  of  the  State  of  Iowa 
from  prosecuting  suits  against  it  or  its  ofiicers,  under  the  provi- 
sions of  an  act  passed  by  the  legislature  of  Iowa,  entitled  "  An  Act 
to  establish  reasonable  maximum  rates  of  charges  for  the  trans- 
portation of  freight  and  passengers  on  the  different  railroads  of 
this  State,"  approved  March  33,  1874. 

Mr.  Chief  Justice  Waite  delivered  the  opinion  of  the  court. 

Eailroad  companies  are  carriers  for  hire.  They  are  incorporated 
as  such,  and  given  extraordinary  powers,  in  order  that  they  may 
the  better  serve  the  public  in  that  capacity.  They  are,  therefore, 
engaged  in  a  public  employment  affecting  the  public  interest,  and, 
under  the  decision  in  Munn  v.  Illinois,  supra,  p.  113,  subject  to  leg- 

2  In  Madison  v.  Madison  G.  &  E.  Co.  (1906),  129  Wis.  49,  the  Court  said, 

at  page  268 : 

"  But  it  is  insisted  by  respondents  that,  since  the  gas  company  is  obli- 
gated to  furnish  gas  to  the  city  and  its  inhabitants  at  a  reasonable  price, 
the  court  has  jurisdiction  to  determine  what,  under  the  existing  facts  and 
circumstances,  is  a  reasonable  charge,  and  to  enforce  it  as  the  measure  of 
future  service  under  like  conditions.  No  doubt  the  court  can  ascertain, 
within  its  judicial  function  and  whenever  the  question  is  necessarily  in- 
volved in  any  controversy  to  which  the  gas  company  is  a  party,  what  is  a 
reasonable  charge  for  gas  furnished.  This,  however,  as  already  shown,  is 
the  extent  to  which  the  court  can  go.  Whatever  might  be  determined  to  be 
a  reasonable  charge,  under  the  facts  and  circumstances  adduced  in  such  an 
inquiry,  cannot  be  enforced  as  a  fixed  charge  for  the  service  for  any  purpose 
other  than  to  determine  the  particular  controversy  between  the  parties  and 
their  privies.  If  it  were  attempted  to  enforce  it  as  a  prescribed  future 
charge,  it  would,  in  an  indirect  way,  usurp  the  legislative  prerogative  of 
prescribing  by  rule  the  compensation  for  a  future  public  service.  This,  as 
we  have  seen,  the  courts  cannot  do." 

1  In  this  connection  notice  again  the  cases  in  Chapter  I,  Section  3,  supra. 
—  Ed. 

2  Part  of  the  statement  of  facts,  the  arguments  of  counsel  and  part  of  the 
opinion  are  omitted. —  Ed. 


SEC.    II.]  POWER   OF    STATE    TO    FIX    RATES.  221 

islative  control  as  to  their  rates  of  fare  and  freight,  unless  pro- 
tected by  their  charters. 

The  Burlington  and  Missouri  Eiver  Railroad  Company,  the  bene- 
fit of  whose  charter  the  Chicago,  Burlington,  and  Quincy  Railroad 
Company  now  claims,  was  organized  under  the  general  corporation 
law  of  Iowa,  with  power  to  contract,  in  reference  to  its  business,  the 
same  as  private  individuals,  and  to  establish  by-laws  and  make  all 
rules  and  regulations  deemed  expedient  in  relation  to  its  affairs, 
but  being  subject,  nevertheless,  at  all  times  to  such  rules  and  regu- 
lations as  the  general  assembly  of  Iowa  might  from  time  to  time 
enact  and  provide.  This  is,  in  substance,  its  charter,  and  to  that 
extent  it  is  protected  as  by  a  contract ;  for  it  is  now  too  late  to  con- 
tend that  the  charter  of  a  corporation  is  not  a  contract  within  the 
meaning  of  that  clause  in  the  Constitution  of  the  United  States 
which  prohibits  a  State  from  passing  any  law  impairing  the  obliga- 
tion of  a  contract.  Whatever  is  granted  is  secured  subject  only  to 
the  limitations  and  reservations  in  the  charter  or  in  the  law  or  con- 
stitutions w^hich  govern  it. 

This  company,  in  the  transactions  of  its  business,  has  the  same 
rights,  and  is  subject  to  the  same  control,  as  private  individuals 
under  the  same  circumstances.  It  must  carry  when  called  upon 
to  do  so,  and  can  charge  only  a  reasonable  sum  for  the  carriage. 
In  the  absence  of  any  legislative  regulation  upon  the  subject,  the 
courts  must  decide  for  it,  as  they  do  for  private  persons,  when  con- 
troversies arise,  what  is  reasonable.  But  when  the  legislature  steps 
in  and  prescribes  a  maximum  of  charge,  it  operates  upon  this  cor- 
poration the  same  as  it  does  upon  individuals  engaged  in  a  similar 
business.  It  was  within  the  power  of  the  company  to  call  upon 
the  legislature  to  fix  permanently  this  limit,  and  make  it  a  part  of 
the  charter;  and,  if  it  was  refused,  to  abstain  from  building  the 
road  and  establishing  the  contemplated  business.  If  that  had  been 
done,  the  charter  might  have  presented  a  contract  against  future 
legislative  interference.  But  it  was  not;  and  the  company  in- 
vested its  capital,  relying  upon  the  good  faith  of  the  people  and 
the  wisdom  and  impartiality  of  legislators  for  protection  against 
wrong  under  the  form  of  legislative  regulation. 

It  is  a  matter  of  no  importance  that  the  power  of  regulation  now 
under  consideration  was  not  exercised  for  more  than  twenty  years 
after  this  company  was  organized.  A  power  of  government  which 
actually  exists,  is  not  lost  by  non-user.  A  good  government  never 
puts  forth  its  extraordinary  powers,  except  under  circumstances 
which  require  it.  That  government  is  the  best  which,  while  per- 
forming all  its  duties,  interferes  the  least  with  the  lawful  pursuits 
of  its  people. 


222  RATES.  [chap.  IV. 

In  1691,  during  the  third  year  of  t|^  reign  of  William  and  Mary, 
Parliament  provided  for  the  reguTation  of  the  rates  of  charges  by 
common  carriers.  This  statute  remained  in  force,  with  some 
amendment,  until  1827,  when  it  was  repealed,  and  it  has  never  been 
re-enacted.  No  one  supposes  that  the  power  to  restore  its  pro- 
visions has  been  lost.  A  change  of  circumstances  seemed  to  render 
such  a  regulation  no  longer  necessary,  and  it  was  abandoned  for 
the  time.  The  power  was  not  surrendered.  That  remains  for  fu- 
ture exercise,  when  required.  So  here,  the  power  of  regulation  ex- 
isted from  the  beginning,  but  it  was  not  exercised  until  in  the 
judgment  of  the  body  politic  the  condition  of  things  was  such  as 
to  render  it  necessary  for  the  common  good. 

Neither  does  it  affect  the  case  that  before  the  power  was  exer- 
cised the  company  had  pledged  its  income  as  security  for  the  pay- 
ment of  debts  incurred,  and  had  leased  its  road  to  a  tenant  that  re- 
lied upon  the  earnings  for  the  means  of  paying  the  agreed  rent. 
The  company  could  not  grant  or  pledge  more  than  it  had  to  give. 
After  the  pledge  and  after  the  lease  the  property  remained  within 
the  jurisdiction  of  the  State,  and  continued  subject  to  the  same 
governmental  powers  that  existed  before.^ 


CENTRAL  OF  GEOEGIA  RAILWAY  CO.  v.  RAILROAD  COM- 
MISSION OF  ALABAMA. 

161  Fed.  925.     1908.^ 

Jones,  District  Judge. 

XV.  Has  the  Legislature  attempted  to  delegate  legislative  power 
to  the  Commission  in  the  authority  conferred  upon  it  to  make  and 
unmake  rates  and  classifications  established  by  statutes?  The  act 
of  August  9,  1907,  provides  in  the  first  section : 

"  That  in  all  cases  where  any  classification  of  railroads  or  of  any 

3  In  Cotting  v.  Kansas  City  Stock  Yards  CJo.  (1901),  183  U.  S.  79,  Mr. 
.TusTiCE  Brewer,  after  stating  the  doctrine  of  Munn  v.  Illinois,  and  re- 
ferring to  cases  which  had  followed  it,  said,  at  page  8.5  : 

"  These  decisions  go  beyond  but  are  in  line  with  those  .in  which  was  recog- 
nized the  power  of  the  State  to  regulate  charges  for  services  connected  with 
any  strictly  public  employment,  as,  for  instance,  in  the  matter  of  common 
carriage,  supply  of  water,  gas.  etc.  Spring  Valley  Water  Works  v.  Schottler, 
110  U.  S.  .347;  Railroad  Commission  Cases,  116  U.  S.  .307:  Wabash,  St. 
Louis  &  Pacific  Railway  v.  Illinois,  118  U.  S.  .557 ;  Dow  v.  Beidelman,  125 
TT.  S.  680;  Chicago,  Milwaukee,  etc..  Railway  v.  iNIinnesota,  1.34  U.  S.  418; 
Chicago  &  Grand  Trunk  Railway  v.  Wellmnn.  143  U.  S.  339;  Reagan  v. 
Farmers'  Loan  &  Trust  Co.,  1.54  U.  S.  362;  St.  Louis  &  San  Francisco  Rail- 
way V.  Gill,  1.56  U.  S.  649;  Covington,  etc..  Turnpike  Co.  v.  Sandford,  164 
U.  S.  .578 :  Smyth  v.  Ames,  169  U.  S.  466 ;  San  Diego  Land  Co.  v.  National 
City,  174  U.  S,  739;  Chicago,  Milwaukee  &  St.  Paul  Railway  v.  Tompkins, 
176  U.  S.  167." 

1  The  statement  of  facts  is  omitted,  and  only  an  extract  from  the  opinion 
is  reprinted. —  Ed. 


SEC.    II.]  POWER  OF    STATE   TO   FIX   RATES.  223 

articles  of  freight  or  an)'  maximum  rates  or  charges  for  the  trans- 
portation of  passengers  or  freight  over  any  railroad  in  this  state, 
have  been,  or  may  hereafter  be  prescribed  by  statute,  or  any  pre- 
vailing rates  or  charges  for  such  transportation  have  been,  or  may 
hereafter  be,  by  statute  made  the  maximum  rates  or  charges,  the 
Railroad  Commission  of  Alabama  shall  have  the  power  and  is  hereby 
authorized  to  change  such  classifications  and  such  rates  or  charges, 
or  any  of  them,  from  time  to  time  as  conditions  may,  in  its  judg- 
ment render  expedient  or  proper  so  to  do,  whether  the  effect  of 
such  changes  be  to  increase  or  reduce  any  of  the  rates  or  charges, 
and  to  establish  and  order  to  be  put  in  force  in  lieu  thereof  any 
new  classification  or  rate  or  charge  which  it  may  deem  reasonable 
and  proper;  and  the  classifications,  rates  or  charges  so  established 
by  it  shall  be  the  lawful  classifications,  rates  or  charges  until  fur- 
ther changed  by  said  Eailroad  Commission." 

Like  power  is  given  as  to  the  rates  and  classifications  in  the  acts 
known  as  the  "  Eight  Group  Acts." 

Legislative  Power  has  been  Attempted  to  be  Delegated  to  the  Com- 
mission as  to  Change  of  Statutory  Rates  and  Classifications. 

XVI.  The  will  of  legislators  never  becomes  the  law,  unless  ex- 
pressed in  the  mode  and  form  the  Constitution  demands.  The  Leg- 
islature, in  framing  a  statute,  may  provide  for  its  unchanged  op- 
eration until  it  is  repealed,  or  it  may  provide  for  contingencies  aris- 
ing after  it  goes  into  effect,  which  in  its  wisdom  may  require  change 
in  the  law,  and  provide  for  the  change,  in  view  of  the  happening 
of  these  contingencies,  upon  the  occurrence  of  which  the  lawmaker 
himself  declares  in  the  Statute  what  the  change  shall  be.  But, 
whatever  the  intent  of  the  lawmaker,  a  statute,  in  order  to  ripen 
into  a  law,  must  always  be  a  perfect  expression  of  the  legislative 
will,  upon  every  contingency  with  which  the  statute  deals,  as  it 
leaves  the  hands  of  the  lawmaking  power.  When  the  Legislature 
declares  its  will  as  to  contingencies,  it  may  lawfully  make  the  tak- 
ing effect  of  the  statute  in  the  first  instance,  or  its  suspension  or 
abrogation  afterwards,  and  the  substitution  of  some  other  law,  de- 
pend upon  the  ascertainment  of  some  particular  state  of  facts  by 
an  executive  officer.  But,  to  be  a  perfect  expression  of  the  legis- 
lative will  as  to  these  matters,  the  statute  itself  must  ascertain 
or  prescribe  a  state  of  facts  which  constitute  the  condition  or  con- 
tingency upon  which  the  change  may  be  made,  and  what  change 
shall  be  effected  in  the  prior  law,  when  that  contingency  is  ascer- 
tained. Under  a  statute  so  framed,  the  Legislature  has  delegated 
no  legislative  authority  to  the  executive  officer.  It  has  simply  made 
use  of  his  services  to  ascertain  a  state  of  facts,  upon  the  ascertain- 
ment of  which  the  Legislature  itself  declares,  in  advance,  its  own 


224  EATES,  [chap.  IV. 

judgment  as  to  "  what  the  law  shall  be  "  under  the  changed  condi- 
tions. The  contingency  upon  which  the  change  shall  take  place 
in  the  operation  of  a  law  must  be  a  state  of  facts  which  the  Legis- 
lature either  ascertains  in  so  many  words,  or  defines  or  prescribes 
by  general  definition,  and  upon  the  finding  of  which  state  of  facts 
the  Legislature,  and  not  some  other  body,  forms  the  opinion,  and 
declares  that  it  is  expedient  and  proper  to  change  the  operation  of 
the  law.  The  propriety  and  expediency  of  changing  a  law  is  the 
very  question  which  the  Constitution  commits  exclusively  to  the 
wisdom  of  the  Legislature,  and  it  must  express  its  own  judgment 
and  will  in  the  statute  as  to  these  questions.  If  the  opinion  or 
judgment  of  some  other  department  as  to  the  happening  of  some 
undefined  event,  and  the  efl'ect  such  event  should  have  upon  the 
legislative  policy,  is  to  determine  whether  there  shall  be  a  change 
in  the  law,  it  is  the  judgment  and  will  of  the  officer  as  to  the  ex- 
pediency of  a  change,  and  not  the  opinion  and  will  of  the  lawmak- 
ing power,  which  effects  the  changes.  The  statute  here  makes  the 
expediency  and  propriety  of  a  change,  which  shall  be  made  when 
the  officer  so  determines,  depend  solely  upon  the  discretion  and  will 
of  an  executive  officer,  and  not  upon  the  happening  of  any  state 
of  facts  upon  which  the  Legislature  itself  has  passed  its  judgment 
and  uttered  its  commands.  The  statutes  in  that  posture  are  neither 
more  nor  less  than  a  legislative  declaration  that  there  shall  be  a 
change  in  the  legislative  will  because  an  executive  officer  deems 
it  expedient,  and  that  because  the  executive  officer  so  wills  there- 
after the  legislative  will  shall  be  only  what  an  executive  officer 
prescribes.  This  is  nothing  more  nor  less  than  the  entire  abdica- 
tion of  the  duty  of  the  Legislature  to  determine  the  expediency  and 
propriety  of  legislation,  and  the  surrender  of  legislative  power  to 
an  executive  officer,  to  use  as  he  pleases  in  the  future. 

The  court  has  struggled  hard  to  find  some  way,  consistent  with 
obedience  to  the  Constitution,  to  avoid  the  consequences  and  in- 
conveniences, both  public  and  private,  which  must  follow  from 
striking  down  the  powers  here  attempted  to  be  conferred  upon  the 
Commission.  Finding  no  escape  on  principle,  the  duty  of  the 
court  is  plain.  It  must  enforce  the  Constitution.  [The  Legisla- 
ture doubtless  intended  in  the  passage  of  these  statutes  to  leave  the 
whole  matter  of  rates  and  classifications  in  the  keeping  of  the 
Commission,  and  thought  it  had  done  so.  It  could  have  done  so 
by  an  absolute  repeal  of  the  schedules  and  classifications  fixed  by 
it,  leaving  the  Commission,  as  an  administrative  body,  to  work 
out  under  rules  and  principles  fixed  by  the  Constitution,  the  stat- 
utes, and  the  common  law,  what  are  reasonable  classifications  and 
rates,  in  view  of  the  facts  in  the  particular  cases  with  which  the 


SEC.  II.]         POWER  OF  STATE  TO  FIX  RATES.  225 

Commission  deals?  i  The  Legislature  could  also  have  retained  the 
"  Group  Acts  "  as^  a  general  guide  for  the  Commission,  and  yet 
given  the  Commission  power  to  change  them,  by  providing  in  those 
statutes  that  upon  the  happening  of  a  certain  state  of  facts  therein 
declared  or  defined,  not  upon  the  mere  opinion  or  judgment  of  the 
Commission  on  undefined  conditions  of  which  the  Commission  is 
the  sole  judge,  and  upon  which  the  Legislature  itself  made  no  dec- 
laration "  what  the  law  shall  be,"  the  Commission  might  thereupon 
change  the  classifications  and  rates,  within  certain  limitations, 
which  the  statutes  themselves  would  state  or  define.  But  nothing 
of  that  kind  was  provided  for  in  any  of  the  statutes.  The  Legis- 
lature has  not  repealed  or  changed  them.  The  constitutional 
trouble  with  the  statute  is  that  the  legislative  power  has  specifically 
declared  its  will  upon  the  wisdom  and  expediency  of  the  particu- 
lar classifications  and  rates,  and  put  them  upon  the  statute  books 
as  the  law  of  the  land.  It  takes  the  lawmaking  power  to  repeal 
or  change  a  law,  as  well  as  to  make  a  law ;  and  the  power  of  repeal- 
ing or  changing  a  law,  or  substituting  another  law  in  its  stead, 
cannot  be  delegated  to  any  other  department,  much  less  to  a  statu- 
tory board.  Turn  the  proposition  over  as  we  may,  and  scan  it 
from  every  constitutional  point  of  view,  we  are  always  confronted 
with  the  fact  that,  in  order  to  change  the  laws  now  in  existence 
as  to  rates  and  classifications,  they  must  be  repealed  or  altered  by 
the  legislative  power  which  made  them.  The  legislative  power 
wliich  made  them  has  not  repealed  or  altered  them.  '  It  has  merely 
attempted  to  let  another  body  undo  what  the  Legislature  has  done. 
It  has  not  declared  in  any  of  those  statutes  its  own  will  as  to 
"  what  the  law  shall  be  "  on  any  changed  state  of  facts  which  the 
lawmakers  have  defined  or  prescribed,  nor,  when  that  state  of  facts 
is  ascertained,  what  shall  be  either  the  nature  or  extent  of  the 
changes  which  the  lawmakers  will  shall  result  therefrom,  except 
that  the  wisdom  and  judgment  of  the  Commission  shall  be  the 
legislative  will  as  to  the  change.  On  these  questions,  upon  which 
the  Legislature  must  speak  if  the  Constitution  be  obeyed,  it  has 
declared  no  will  of  its  own  as  to  "  what  the  law  shall  be."  It  has 
simply  declared  to  the  Commission  that  it  is  authorized,  for  any 
reasons  it  may  think  of  sufficient  importance,  to  unmake  what  the 
Legislature  has  declared  to  be  the  law  of  the  land,  and  set  up  other 
standards  of  its  own,  which  shall  stand  as  the  law  until  again 
changed 'by  order  of  the  Commission.  In  short,  it  has  referred  the 
whole  matter  of  "  what  the  law  shall  be  "  to  the  Eailroad  Commis- 
sion as  a  "committee  with  power  to  act,"  and  declared  that  the 
legislative  will  as  to  the  future  shall  be  whatever  the  Commission 
may  will  and  declare. 


336  KATES.  [chap.   IV. 

Of  the  wisdom  of  the  Legislature's  determining  for  itself  what 
are  just  and  reasonable  rates  and  classifications,  and  imbedding 
those  rates  and  classifications  in  statutes,  whereby  they  become  the 
law  of  the  land  and  cannot  be  altered  except  by  an  act  of  the  law- 
making power  itself,  the  Legislature  must  determine  for  itself; 
but,  when  the  Legislature  does  so  determine,  the  Constitution 
fastens  upon  their  act,  and  provides  the  only  mode  in  which  the 
requirements  of  such  enactments  can  be  undone  or  changed.  While 
some  inconvenience,  both  public  and  private,  must  result  from  fol- 
lowing the  Constitution  in  this  case,  the  evil  is  of  small  consequence 
as  compared  with  the  greater  evils  which  would  result  in  allowing 
such  departures  from  the  fundamental  law.  It  is  vital  to  the  wel- 
fare and  happiness  of  the  people  that  the  law  shall  not  be  made 
and  unmade,  or  changed,  save  by  the  lawmaking  power  itself.  To- 
day it  is  the  carrier  and  those  who  deal  with  him  who  are  attempted 
to  be  subjected  to  the  doctrine  that  administrative  officers  may 
change  the  law  as  enacted  by  the  Legislature,  and  prescribe  differ- 
ent rules  of  conduct  from  those  made  by  the  supreme  lawmaking 
power,  varying  the  law  according  to  their  own  notions  whenever, 
*'  in  their  judgment,"  it  is  ■"  expedient  and  proper  so  to  do."  If 
such  power  can  lawfully  be  conferred  upon  administrative  officers 
in  these  cases,  it  cannot  be  denied  to  executive  oflBcers  in  other 
cases.  It  is  an  alarming  doctrine  to  proclaim  in  a  free  country 
that  the  laws  for  the  control  of  the  rights  and  business  of  citizens, 
under  the  complex  conditions  of  modern  life,  can  be  made  to  give 
place  to  different  obligations  and  rules  made  by  executive  officers, 
*'  whenever  conditions  may,  in  their  judgment,  render  it  expedient 
or  proper  so  to  do."  The  whole  matter  is  exhaustively  discussed 
in  Field  v.  Clark,  143  U.  S.  694,  13  Sup.  Ct.  505,  36  L.  Ed.  294, 
wherein  is  quoted  with  approval  the  words  of  the  Supreme  Court  of 
Ohio  (Eailroad  Co.  v.  Clinton  County  Com'rs.,  1  Ohio  St.  88) 
thai: 

f  The  true  distinction  is  between  the  delegation  of  power  to  make 
a  law,  which  necessarily  involves  a  discretion  as  to  what  it  shall  be, 
and  the  conferring  of  authority  and  discretion  as  to  its  execution, 
to  be  exercised  under  and  in  pursuance  of  law.  The  first  cannot 
be,..done ;  to  the  latter,  no  valid  objection  can  be  made."y 

!ln  the  one  case  the  official  overrides  the  law  and  substitutes  his 
own  judgment  for  it;  in  the  other,  he  does  not  change  the  law, 
hut  merely  conforms  to  ity  A  late  instructive  case  is  State 'i;.  Great 
Northern  Railway  Company,  100  Minn.  445,  111  N.  W.  289,  10 
L.  R.  A.  (N.  S.)  250.  Our  own  cases  of  Mitchell,  Judge,  etc.,  v. 
State  ex  rel.,  etc.,  134  Ala.  392,  32  South.  687,  and  Harlan  v.  State 
ex  rel.,  136  Ala.  155,  33  South.  858,  are  conclusive  on  this  point. 


SEC.  II.]         POWER  OF  STATE  TO  FIX  RATES.  227 

Whether  the  legislative  department  of  a  state,  under  its  Constitu- 
tion, can  delegate  legislative  power,  involves  no  federal  question. 
The  decisions  of  the  highest  court  of  the  state  are  binding  upon  the 
federal  courts  on  such  a  question.  Few  cases  can  be  found  where 
a  Legislature  has  ever  attempted  to  authorize  any  other  depart- 
ment of  the  government  to  strike  down  an  explicit  legislative  com- 
mand, and  substitute,  in  its  unshackled  discretion,  some  other  com- 
mand; and  no  case  can  be  found  where  such  an  attempt  ever  suc- 
ceeded. See  State  v.  Morris  County,  36  ISF.  J.  Law,  72,  13  Am. 
Eep.  422. 


VILLAGE  OF  SAEATOGA  SPEINGS  v.   SAEATOGA  GAS, 

ELECTEIC  LIGHT  AND  POWEE  CO. 

191  N.  Y.  123.     1908.^ 

CuLLEN,  C.  J.  This  appeal  presents  the  question  of  the  consti- 
tutionality of  the  statute  passed  by  the  Legislature  in  1905  (Chap. 
737),  providing  for  the  appointment '  by  the  Governor  of  a  com- 
mission, which  was  authorized  to  determine,  upon  the  complaint 
of  municipal  authorities  or  consumers,  the  maximum  price  to 
be  charged  for  service  by  gas  and  electric  light  companies.  This 
statute  confers  many  other  powers  upon  the  commission.  'Jhis  ap- 
peal, however,  presents  only  the  question  of  the  validity  of  the  stat- 
ute in  so  far  as.  it  confers  upon  the  commission  the  power  to  fix 
maximum  rates.  The  provisions  of  the  statute  in  this  respect  are 
easily  separable  from  the  remainder  of  the  act,  and,  therefore,  it 
is  the  validity  of  such  provisions  alone  that  we  shall  consider  on 
this  appeal. 

The  argument  by  the  learned  counsel  for  the  appellant  in  their 
attack  upon  the  statute  has  taken  a  very  broad  range.  While  they 
concede  that  the  fixing  of  maximum  rates  of  carriers  and  public 
service  corporations  as  a  proper  exercise  of  the  police  power  of  the 
state,  provided,  of  course,  that  the  rates  so  fixed  are  not  confiscatory 
and  in  violation  of  property  rights,  it  is  contended  that  the  power 
is  strictly  legislative,  and  that  the  act  before  us  is  unconstitutional, 
in  that  it  assumes  to  delegate  to  the  commission,  an  administrative 
body,  legislative  powers. 

The  argument  against  the  constitutionality  of  the  underlying 
feature  of  the  statute  proceeds  on  two  propositions  — Q^ne  that  leg- 
islative power  cannot  be  delegated,  and  the  other  that  rate-mak- 
ing is  a  legislative  power.'  Each  proposition  is  true,  if  not  con- 
strued too  broadly,  but  each  is  liable  to  such  misconstruction.  To 
be  strictly  accurate,  the  first  requires  the  qualification  pointed  out 

1  The  arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


228  RATES.  [chap.  IV. 

by  Chief  Justice  Marshall  in  Wayman  v.  Southard  (10  "WQieat.  1, 
42)  :  "/It  will  not  be  contended  that  Congress  can  delegate  to  the 
courts,  or  to  any  other  tribunals,  powers  which  are  strictly  and  ex- 
clusively legislative.  But  Congress  may  certainly  delegate  to  others 
powers  which  the  Legislature  may  rightfully  exercise  itself.^  If 
by  the  second  proposition  it  is  intended  to  assert  that  the  rate-mak- 
ing power  being  part  of  the  police  power  is  vested  in  the  Legisla- 
ture, it  is  true.  But  if  it  is  intended  to  go  further  and  deny  the 
power  of  the  Legislature  to  confer  by  general  laws  upon  other 
branches  of  the  government,  the  duty  not  only  of  executing  the  law, 
but  of  determining  its  application  to  particular  cases  and  the  formu- 
lating rules  for  its  exercise,  then  in  my  judgment  it  is  not  true. 
{a  priori  reasoning  as  to  the  nature  and  proper  distribution  of  the 
powers  of  government  is  not  conclusive  on  the  question  of  what 
powers  are  so  inherently  legislative  as  to  preclude  their  delegation 
in  any  degree  to  the  other  branches  of  the  government_^ 

We  are  now  brought  to  the  consideration  whether,  not  the  power 
to  enact  general  laws  for  the  regulation  of  rates,  but  the  power  to 
prescribe  particular  rates  to  be  charged  by  particular  carriers,  pub- 
lic service  corporations,  or  other  persons  engaged  in  occupations  or 
business  affected  with  the  public  interest,  and  so  constitutionally 
subject  to  regulation  as  to  their  charges,  is  so  inherently  and  ex- 
clusively a  legislative  power  that  it  is  impossible  of  delegation  to 
other  branches  of  the  government.  There  is  first  presented  to  us 
the  argument  resting  on  history,  and  it  is  said :  "  It  cannot  be 
gainsaid  that  until  very  recently  the  duty  (that  of  imposing  rates) 
was  at  all  times  a  legislative  one.  For  many  centuries  Parliament 
has  directly  legislated  as  to  the  price  of  products,  regulating  the 
selling  value  of  the  great  staples  like  wool  and  food,  and  even  the 
employment  of  labor.  .  .  .  The  earliest  known  regulation  of  rates 
of  carriage  was  by  an  act  of  Parliament  in  1692."  If  by  this  it  is 
intended  to  assert  that  specific  rates  for  commodities,  services,  or 
labor  were  prescribed  by  Parliament  alone,  my  research  (which  is 
necessarily  limited)  leads  me  to  the  belief  that  the  statement  is 
incorrect.  Legislation  fixing  the  wages  of  laborers  commenced  at 
a  very  early  period  in  England,  and  it  may  be  that  at  the  time 
the  act  of  Parliament  in  terms  fixed  the  special  wage.  The  matter 
was  the  subject  of  different,  and  possibly  conflicting,  legislation 
until  the  time  of  Elizabeth,  when  many  of  the  old  laws  were  re- 
pealed and  a  comprehensive  statute  enacted  embracing  servants, 
laborers,  artificers,  and  substantially  all  of  what  we  would  term 
the  wage-earning  class.  St.  5  Eliz.  (1562)  c.  4.  The  statute 
(section  15)  made  it  the  duty  of  the  justices  of  the  peace  in  every 
shire  to  meet  with  the  sheriff  of  the  county,  if  it  was  convenient. 


SEC.    II.]  POWER   OF    STATE    TO    FIX   RATES.  229 

and  with  the  mayor  of  any  city  or  incorporated  town,  if  there  were 
such  in  the  shire,  after  Easter  in  each  year,  and  limit,  rate,,  and 
appoint  the  wages  for  all  artificers,  handicraftsmen,  husbandmen, 
or  other  laborer,  servant,  or  workman.  As  far  as  I  can  discover 
from  the  time  of  the  enactment  of  this  statute  until  the  regulation 
of  wages  ceased  to  be  regarded  as  a  proper  subject  for  state  con- 
trol, wages  were  fixed,  not  by  act  of  Parliament,  but  by  the  justices 
of  the  peace.  This  must  have  been  the  most  extensive,  if  not  also 
the  most  important,  field  of  rate  making  upon  which  the  govern- 
ment ever  entered.  The  power  thus  devolved  upon  the  justices  of 
the  peace  was  not  conferred  on  any  principle  of  local  self-govern- 
ment which  obtains  with  us,  for  no  such  idea  prevailed  in  England, 
except  possibly  in  the  cases  of  chartered  cities  or  towns  to  which 
special  privileges  were  granted  by  their  charters.  The  justices  of 
the  peace  were  appointed  and  removed  by  the  Crown  at  pleasure, 
and,  like  our  own,  were  more  administrative  than  judicial  in  their 
functions.  (People  ex  rel.  Lawrence  v.  Mann,  97  N.  Y.  530.) 
The  power  was  conferred  on  the  justices  simply  for  convenience, 
or,  possibly,  of  necessity,  because  at  the  time  of  the  enactment  of 
the  statute  the  condition  of  the  country,  almost  devoid  of  proper 
highways  for  the  transportation  of  goods,  and  with  comparatively 
little  communication  between  the  inhabitants  of  its  different  parts, 
must  have  occasioned  great  difference  in  the  price  of  commodities 
and  rates  of  wages  in  different  localities.  The  only  act  I  find 
passed  in  1692  on  the  subject  of  carriers  is  St.  3  W.  &  M.  c.  12. 
By  section  24  it  is  enacted  "that  the  Justices  of  the  Peace  of 
every  County  and  other  Place  within  the  Realm  of  England  or  Do- 
minion of  Wales  shall  have  Power  and  Authority,  and  are  hereby 
in  joined  and  required,  at  their  next  respective  Quarter  or  General 
Session  after  Easter  Day,  yearly,  to  assess  and  rate  the  Prices  of 
all  Land-carriage  of  Goods  whatsoever  to  be  brought  into  any 
Place,  or  Places  within  their  respective  Limits  and  Jurisdictions, 
by  any  common  Carrier  or  Wagoner."  Here  again  the  power  to 
fix  rates  was  conferred  on  administrative  officers.  These  statutes 
must  have  remained  extant  till  the  close  of  the  eighteenth  century, 
for  in  an  edition  of  Burns'  Justice,  published  in  1800,  much  space 
is  devoted  to  the  duty  of  the  justices  under  them,  and  an  edition 
of  Bacon's  Abridgment,  published  in  1807,  mentions  them  as  then 
in  force.  Indeed,  Sir  James  Stephen  states  that  the  act  of  Eliza- 
beth was  not  formally  repealed  until  1875,  though  it  practically 
became  a  dead  letter  many  years  before,  legislation  in  England 
prior  to  the  revolution  would,  therefore,  seem  rather  to  support  than 
to  disapprove  the  proposition  that  details  of  Jate  making  could 
properly  be  delegated  to  administrative  officersj 


230  RATES.  [chap.    IV. 

The  enormous  pecuniary  interest  involved,  and  the  inherent  dif- 
ficulties of  the  problem,  would  doubtless  dictate  great  caution  and 
mature  deliberation  in  enacting  any  legislation  on  the  subject ;  but 
it  seems  to  me  that  it  should  equally  dictate  that  the  legislation 
enacted  should  provide  the  most  practical,  just,  and  efficient  solu- 
tion of  the  problem.  These  considerations  also  apply  to  the  case 
before  us.  There  are  in  this  state  approximately  450  gas  light 
and  electric  light  companies.  They  are  located  in  nearly  every 
portion  of  the  state,  which  contains  within  its  bounds,  not  only 
cities  varying  in  population  from  10,000  to  4,000,000,  but  villages, 
agricultural  or  rural  communities,  and  the  wild  forests  of  the  Adi- 
rondacks.  It  is  plain  that  no  uniform  rate  of  charges  could  be 
established  that  would  be  just  or  reasonable.  Besides,  the  difference 
in  the  output  of  the  several  companies,  varying  with  the  size  of  the 
communities  they  respectively  supply,  as  well  as  the  difference  in 
the  cost  of  material  to  the  various  companies,  dependent  on  their 
location  with  reference  to  the  cost  of  transportation  of  coal,  oil,  and 
the  like,  would  make  a  rate  that  was  fair  in  one  place  unreasonable 
in  another.  Therefore,  any  close  approximation  to  a  reasonable 
tariff  would  require  special  rates  to  be  prescribed  for  many  different 
localities.  To  do  this  properly  would  involve  an  investigation  into 
the  particular  facts  in  each  case.  There  was  a  time  in  the  history 
of  this  country  when  carriers  and  public  service  corporations  were 
so  few  that  the  Legislature  itself  might  have  performed  that  labor ; 
but  by  reason  of  the  rapid  growth  of  population  and  the  great  in- 
crease in  the  number  of  such  corporations  it  has  become  impracti- 
cable for  the  Legislature  to  discharge  that  duty.  Moreover,  many 
rates  might  require  alteration  from  time  to  time.  That  the  most 
appropriate  method  (speaking  from  a  practical,  not  necessarily 
constitutional,  point  of  view)  is  the  creation  of  a  commission  or 
body  of  experts  to  determine  particular  rates,  has  been  said  several 
times  in  the  opinions  rendered  by  the  Supreme  Court  of  the  United 
States  in  the  various  railroad  commission  cases  and  in  those  of 
state  courts.  Of  course,  these  remarks  are  obiter,  and  they  are 
quoted  only  to  show  the  very  general  recognition  by  the  courts  that 
convenience,  if  not  necessity,  requires  such  a  course.  While  no 
consideration  of  convenience  or  of  supposed  necessity  would  jus- 
tify us  in  ignoring  any  constitutional  mandate  or  limitation,  it 
must  be  remembered  that  we  have  no  express  constitutional  provi- 
sion on  the  subject,  and  that  it  is  sought  to  condemn  the  legisla- 
tion before  us  solely  hj  extending  the  principle  that  the  Legisla- 
ture cannot  delegate  legislative  powers  (a  principle  which,  though 
unquestionably  true,  is,  as  we  have  seen,  true  only  within  limits)  to 
a  point  that  would  render  efficient  legislation  on  the  subject  im- 


SEC.  II.]         POWER  OF  STATE  TO  FIX  RATES,  231 

practicable.  It  cannot  be  said,  to  use  the  language  of  Justice  Har- 
lan, that  in  any  real  sense  the  Legislature  has  delegated  its  power 
to  the  commission.  The  statute  is  complete.  The  Legislature,  not 
the  commission,  has  enacted  that  there  shall  be  maximum  rates 
for  the  charges  of  the  gas  and  electric  light  companies,  and  that 
light  shall  be  furnished  to  consumers  at  those  rates,  and  has  pro- 
vided the  penalty  for  extorting  greater  charges  for  service.  What 
is  intrusted  to  the  commission  is  the  duty  of  investigating  the  facts, 
and,  after  a  public  hearing,  of  ascertaining  and  determining  what 
is  a  reasonable  maximum  rate. 

It  is  now  necessary  to  consider  the  objections  to  some  special 
features  of  the  particular  act  before  us.  It  is  contended  that,  even 
conceding  that  the  Legislature  may  commit  to  an  administrative 
board  the  power  to  determine  a  tariff  of  rates,  the  statute  must 
prescribe  some  standard  by  which  the  action  of  the  board  is  to  be 
governed,  and  that  otherwise  the  whole  plenary  power  of  the  Leg- 
islature is  intrusted  to  the  board,  whose  action  may  be  arbitrary; 
and  it  is  urged  the  statute  before  us  provides  no  such  standard- 
We  think  otherwise.  ;^The  statute  provides  that  the  commission  shall 
fix  the  rate  within  the  limits  prescribed  by  law.  This  includes 
both  statute  law  and  common  law.j  There  may  have  been  com- 
panies which  had  franchises  immune  from  invasion  by  which  they 
were  authorized  to  charge  specific  rates.  The  common  law  pre- 
scribes the  rule  that  the  rate  shall  be  reasonable,  and  I  think,  even 
without  special  mention,  the  statute  would  necessarily  imply  the 
same  limitation.  But  it  is  said  that,  granting  this,  "  reasonable  " 
is  really  no  standard,  but  a  mere  generality.  Again,  we  are  of  a 
different  opinion.  Indeed,  if  the  statute  assumed  to  fix  any  other 
standard  for  rates  than  that  they  should  be  reasonable,  we  think 
it  would  be  much  more  open  to  attack  than  in  its  present  form. 
A  lawmaker  may  exhaust  reflection  and  ingenuity  in  the  attempt 
to  state  all  the  elements  which  affect  the  reasonableness  of  a  rate 
only  to  find  that  in  a  particular  case  he  had  omitted  the  factor 
which  controlled  the  disposition  of  that  case. 


INTEESTATE  COMMERCE  COMMISSION"  v.  CINCINNATI, 
NEW  ORLEANS  AND  TEXAS  PACIFIC  RAILWAY  CO. 

167  U.  S.  479.     1896.^ 

Mr.  Justice  Brewer,  after  stating  the  case,  delivered  the  opin- 
ion of  the  court. 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion 
are  omitted. —  Ed. 


232  RATES.  [chap.    IV. 

A  similar  question  was  before  us  at  the  last  term,  in  Cincinniati, 
N.  0.  &  T.  P.  Ry.  Co.  V.  Interstate  Commerce  Commission,  163  TJ. 
S.  184,  and  in  the  opinion,  on  pages  196  and  197,  we  said : 

"  Whether  congress  intended  to  confer  upon  the  interstate  com- 
merce commission  the  power  to  itself  fix  rates  was  mooted  in  the 
courts  below,  and  is  discussed  in  the  briefs  of  counsel. 

"We  do  not  find  any  provision  in  the  act  that  expressly,  or  by 
necessary  implication,  confers  such  a  power. 

"  It  is  argued  on  behalf  of  the  commission  that  the  power  to 
pass  upon  the  reasonableness  of  existing  rates  implies  a  right  to 
prescribe  rates.  That  is  not  necessarily  so.  (^The  reasonableness 
of  the  rate  in  a  given  case  depends  on  the  facts,  and  the  function 
of  the  commission  is  to  consider  these  facts  and  give  them  their 
proper  weight)  If  the  commission,  instead  of  witliliolding  judg- 
ment in  such  a  matter  until  an  issue  shall  be  made  and  the  facts 
found,  itself  fixes  a  rate,  that  rate  is  prejudged  by  the  commission 
to  be  reasonable. 

"  We  prefer  to  adopt  the  view  expressed  by  the  late  Justice  Jack- 
son, when  circuit  judge,  in  the  case  of  Interstate  Commerce  Com- 
mission V.  Baltimore  &  0.  E.  Co.,  43  Fed.  37,  and  whose  judgment 
was  affirmed  by  this  court.     145  U.  S.  263. 

" '  Subject  to  the  two  leading  prohibitions,  that  their  charges 
shall  not  be  unjust  or  unreasonable,  and  that  they  shall  not  un- 
justly discriminate,  so  as  to  give  undue  preference  or  disadvantage 
to  persons  or  traffic  similarly  circumstanced,  the  act  to  regulate 
commerce  leaves  common  carriers  as  they  were  at  the  common  law, 
free  to  make  special  contracts  looking  to  the  increase  of  their  busi- 
ness, to  classify  their  traffic,  to  adjust  and  apportion  their  rates 
so  as  to  meet  the  necessities  of  commerce,  and  generally  to  manage 
their  important  interests  upon  the  same  principles  which  are  re- 
garded as  sound,  and  adopted,  in  other  trades  and  pursuits.' " 

The  views  thus  expressed  have  been  vigorously  and  earnestly  chal- 
lenged in  this  and  in  other  cases  argued  at  the  present  term.  In 
view  of  its  importance,  and  the  full  arguments  that  have  been  pre- 
sented, we  have  deemed  it  our  duty  to  re-examine  the  question  in 
its  entirety,  and  to  determine  wliat  powers  congress  has  given  to 
this  commission  in  respect  to  the  matter  of  rates.  The  importance 
of  the  question  cannot  be  overestimated.  Billions  of  dollars  are  in- 
vested in  railroad  properties.  Millions  of  passengers,  as  well  as 
millions  of  tons  of  freight,  are  moved  each  year  by  the  railroad 
companies,  and  this  transportation  is  carried  on  by  a  multitude 
of  corporations  working  in  different  parts  of  the  country,  and  sub- 
jected to  varying  and  diverse  conditions. 

It  will  be  perceived  that  in  this  case  tlie  Interstate  Commerce 


SEC.  II.]         POWER  OF  STATE  TO  FIX  RATES.  233 

Commission  assumed  the  right  to  prescribe  rates  which  should  con- 
trol in  the  future,  and  their  application  to  the  court  was  for  a 
mandamus  to  compel  the  companies  to  comply  with  their  decision; 
that  is,  to  abide  by  their  legislative  determination  as  to  the  maxi- 
mum rates  to  be  observed  in  the  future. 

We  have  therefore  these  considerations  presented :  First.  The 
power  to  prescribe  a  tariff  of  rates  for  carriage  by  a  common  car- 
rier is  a  legislative,  and  not  an  administrative  or  Judicial,  func- 
tion, and,  having  respect  to  the  large  amount  of  property  invested 
in  railroads,  the  various  companies  engaged  therein,  the  thousands 
of  miles  of  road,  and  the  millions  of  tons  of  freight  carried,  the 
varying  and  diverse  conditions  attaching  to  such  carriage,  is  a 
power  of  supreme  delicacy  and  importance.  Second.  That  Con- 
gress has  transferred  such  a  power  to  any  administrative  body  is 
not  to  be  presumed  or  implied  from  any  doubtful  and  uncertain 
language.  The  words  and  phrases  efficacious  to  make  such  a  dele- 
gation of  power  are  well  understood,  and  have  been  frequently  used, 
and,  if  Congress  had  intended  to  grant  such  a  power  to  the  Inter- 
state Commerce  Commission,  it  cannot  be  doubted  that  it  would 
_  have  used  language  open  to  no  misconstruction,  but  clear  and  direct. 
Third.  Incorporating  into  a  statute  the  common-law  obligation  rest- 
ing upon  the  carrier  to  make  all  its  charges  reasonable  and  just, 
and  directing  the  commission  to  execute  and  enforce  the  provisions 
of  the  act,  does  not  by  implication  carry  to  the  commission,  or  in- 
vest it  with  the  power  to  exercise,  the  legislative  function  of  pre- 
scribing rates  which  shall  control  in  the  future.  Fourth.  (Beyond 
the  inference  which  irresistibly  follows  from  the  omission  to  grant 
in  express  terms  to  the  commission  this  power  of  fixing  rates  is  the 
clear  language  of  section  6,  recognizing  the  right  of  the  carrier  to 
establish  rates,  to  increase  or  reduce  them,  and  prescribing  the  con- 
ditions upon  which  such  increase  or  reduction  may  be  made,  and 
requiring,  as  the  only  conditions  of  its  action,  first,  publication; 
and,  second,  the  filing  of  the  tariff  with  the  commission.  The 
grant  to  the  commission  of  the  power  to  prescribe  the  form  of  the 
schedules,  and  to  direct  the  place  and  manner  of  publication  of 
joint  rates,  thus  specifying  the  scope  and  limit  of  its  functions  in 
this  respect,  strengthens  the  conclusion  that  the  power  to  prescribe 
rates  or  fix  any  tariff  for  the  future  is  not  among  the  powers 
granted  to  the  commission.) 

/  These  considerations  convince  us  that  under  the  interstate  com- 
merce act  the  commission  has  no  power  to  prescribe  the  tariff  of 
rates  which  shall  control  in  the  future,  and  therefore  cannot  in- 
voke a  judgment  in  mandamus  from  the  courts  to  enforce  any  such 
tariff  by  it  prescribed.] 


234  KATES.  [chap,  IV. 

But  has  the  commission  no  functions  to  perform  in  respect  to 
the  matter  of  rates,  no  power  to  make  any  inquiry  in  respect 
thereto  ?  Unquestionably  it  has,  and  most  important  duties  in  re- 
spect to  this  matter.  It  is  charged  with  the  general  duty  of  in- 
quiring as  to  the  management  of  the  business  of  railroad  com- 
panies, and  to  keep  itself  informed  as  to  the  manner  in  which  the 
same  is  conducted,  and  has  the  right  to  compel  complete  and  full 
information  as  to  the  manner  in  which  such  carriers  are  transacting 
their  business.  And,  with  this  knowledge,  it  is  charged  with  the 
duty  of  seeing  that  there  is  no  violation  of  the  long  and  short  haul 
clause ;  that  there  is  no  discrimination  between  individual  shippers, 
and  that  nothing  is  done,  by  rebate  or  any  other  device,  to  give 
preference  to  one  as  against  another;  that  no  undue  preferences 
are  given  to  one  place  or  places  or  individual  or  class  of  individu- 
als, but  that  in  all  things  that  equality  of  right,  which  is  the  great 
purpose  of  the  interstate  commerce  act,  shall  be  secured  to  all  ship- 
pers. It  must  also  see  that  that  publicity  which  is  required  by 
section  6  is  observed  by  the  railroad  companies.  Holding  the  rail- 
road companies  to  strict  compliance  with  all  these  statutory  pro- 
visions, and  enforcing  obedience  to  all  these  provisions,  tends,  as. 
observed  by  Commissioner  Cooley  in  In  re  Chicago,  St.  P.  &  K.  C. 
Ey.  Co.,  2  Interst.  Commerce  Com.  E.  331,  261,  to  both  reason- 
ableness and  equality  of  rate,  as  contemplated  by  the  interstate  com- 
merce act. 


LOUISVILLE  AND  NASHVILLE  EAILEOAD  CO.  v.  INTEE- 
STATE  COMMEECE  COMMISSION. 

184  Fed.  118.     1910.^ 

Severens,  Circuit  Judge.  Three  several  complaints  were  made 
to  the  commission  concerning  certain  freight  rates  charged  by  this 
complainant  upon  traffic  between  New  Orleans,  La.,  and  Mobile, 
Ala.,  between  New  Orleans  and  Pensacola,  Fla.,  and  between  New 
Orleans  and  Montgomery,  Selma,  and  Prattville;  each  of  which 
last  three  mentioned  places  being  in  Alabama  and  within  the  same 
zone  of  official  classification.  The  complaint  in  each  case  was  that 
the  rates  were  unreasonable  and  unjust  per  se,  and  were  unduly 
prejudicial  to  the  commercial  interests  of  New  Orleans.  The  com- 
plaints were  made  by  the  board  of  trade  of  the  last-named  city. 
The  commission  gave  notice  thereof  to  the  complainant  and  fixed  a 
time  and  place  for  hearing.     The  complainant  appeared  and  an- 

1  Part  of  the  opinion  is  omitted. —  Ed. 


SEC.    II.]  rOWER   OF    STATE   TO    FIX   RATES.  235 

swered.  Proofs  were  submitted  by  the  respective  parties  and  con- 
sidered by  the  commission.  Whereupon  the  commission,  being  of 
opinion  that  tlie  rates  which  were  charged  were  too  high,  reduced 
them  in  respect  to  several  classes  of  freight,  and  fixed  them  at  speci- 
fied new  rates,  which  it  ordered  the  complainant  to  observe.  By 
its  order  the  date  upon  which  it  should  become  effective  was  stated. 
No  further  statement  in  detail  of  these  proceedings  is  necessary, 
as  their  regularity  is  not  contested. 

A  brief  history  of  the  matter  of  rates  on  the  routes  above  men- 
tioned is  necessary  to  a  full  understanding  of  the  action  of  the  com- 
mission and  the  effect  of  its  order.  A  schedule  of  rates  on  these 
routes  was  fixed  by  the  railroad  company  in  1887,  and  adhered  to 
until  1907,  when,  upon  complaint  made  by  shippers  at  New  Or- 
leans that  the  through  rates  were  unreasonably  high,  and  amounted 
to  more  than  the  sum  of  the  local  rates,  and  asking  for  a  reduction 
of  through  rates  to  rates  not  greater  than  the  sum  of  the  local 
rates  between  the  termini  of  the  through  routes  and  intermediate 
points,  the  railroad  company  changed  its  schedule  by  raising  the 
local  rates  so  that  their  sum  should  equal  the  through  rates  which 
it  had  been  charging.  The  through  rates  were  left  undisturbed. 
Tliese  conditions  continued  until  the  autumn  of  1909,  when  the 
New  Orleans  Board  of  Trade  made  complaints  of  the  existing  rates 
to  the  Interstate  Commerce  Commission,  urging  that  they  were 
unreasonable  and  asking  for  an  order  requiring  the  reduction  of 
the  local  rates  to  the  old  schedule,  and  the  reduction  of  the  through 
rates  to  the  sum  of  the  locals  so  reduced.  The  commission  was  of 
opinion  that  the  known  circumstances  and  the  proofs  supported 
the  complaints,  and  on  November  26,  1909,  made  the  order  in  ques- 
tion. It  is  to  be  understood  that  what  is  here  said  relates  to  cer- 
tain classes  of  freights  and  not  to  entire  schedules.  The  object 
of  this  bill  is  to  obtain  a  decree  enjoining  the  commission  from 
.enforcing  its  order.  The  complaint  made  against  it  is  that  it  is 
in  excess  of  the  authority  conferred  by  the  acts  of  Congress  creating 
the  commission  and  defining  its  powers,  and  that  the  order  is  in 
violation  of  the  constitutional  rights  of  the  complainant.  And  it 
is  further  urged  that  the  order  is  based  upon  manifest  errors  of 
law  and  fact,  that  the  rates  prescribed  by  it  are  unreasonably  low 
and  in  violation  of  section  1  of  the  act  (Act  Feb.  4,  1887,  c.  104, 
24  Stat.  379  [U.  S.  Comp.  St.  1901,  p.  3154]),  and  that  it  violates 
section  3,  in  that  it  creates  undue  and  unreasonable  preferences. 
From  these  premises  it  is  seen  that  the  subject  of  the  controversy 
is  an  order  prescribing  the  maximum  rates  on  interstate  traffic. 
That  the  order  concerns  a  subject  witliin  the  scope  of  the  powers 
of  the  commission  cannot  be  doubted;  and  the  first  question  is 


336  KATES.  [chap.    IV. 

whether  the  order  transcends  the  due  limitation  of  the  powers  which 
are  undoubtedly  possessed  by  the  commission. 

In  pursuing  this  inquiry  it  is  of  prime  importance  that  we  ap- 
prehend clearly  the  nature  of  the  power  on  which  the  order  rests; 
and  for  greater  clearness  it  is  well  to  emphasize  the  fact  that  the 
particular  power  in  question  is  one  which  relates  to  the  prescrip- 
tion of  rules  and  regulations  for  future  conduct,  and  it  is  not  a 
power  for  affording  remedies  for  past  misconduct  or  other  violations 
of  legal  rights.  (As  has  been  pointed  out  in  the  opinions  of  the  Su- 
preme Court,  the  power  thus  defined  is  legislative  in  its  nature;  and 
it  is  well  settled  upon  a  long  series  of  decisions  by  that  court  in 
the  development  of  this  subject  that,  when  this  legislative  power 
concerns  the  administrative  affairs  of  the  government,  it  may  be 
delegated  to  an  officer,  or  a  board  already  existing  or  created  for 
the  purpose,  and,  when  so  delegated,  the  power  may  be  as  fully  ex- 
ercised as  the  Legislature  might  have  exercised  it,  subject  to  any 
limitations  imposed  by  the  Legislature  itself);i  When  a  subject  re- 
quires legislation  for  the  regulation  of  futui^  conduct,  but  the  ob- 
jects of  it  are  so  diffuse  and  variable  that  they  cannot  be  distinctly 
apprehended  and  comprised  in  the  ordinary  terms  of  legislative 
classification,  it  is  not  unusual  to  prescribe  general  rules,  if  such 
do  not  already  exist,  and  delegate  the  power  to  apply  those  rules 
to  the  varying  circumstances  which  may  arise  and  give  occasion 
for  control.  The  necessity  of  legislation  in  such  form  justifies  its 
adoption;  and  it  is  not  obnoxious  to  the  Constitution,  in  that  it 
delegates  legislative  power.  Wayman  v.  Southard,  10  Wheat.  1,  6 
L.  Ed.  253 ;  Field  v.  Clark,  143  U.  S.  649,  12  Sup.  Ct.  495,  36  L. 
Ed.  294 ;  Buttfield  v.  Stranahan,  192  U.  S.  476,  24  Sup.  Ct.  349, 
48  L.  Ed.  425 ;  Union  Bridge  Co.  v.  United  States,  204  U.  S.  364, 
27  Sup.  Ct.  367,  51  L.  Ed.  523. 

And  it  would  be  difficult  to  instance  an  occasion  in  the  history 
of  federal  legislation  so  plainly  subject  to  the  application  of  this 
exceptional  rule  as  the  enactment  of  the  interstate  commerce  law 
and  the  carrying  forward  of  its  scheme  by  subsequent  amendments. 
It  is  manifest  that  some  such  scheme  as  this  must  have  been  adopted 
or  the  purpose  to  control  carriers  engaged  in  interstate  commerce 
must  fail.  It  would  have  been  impossible  for  Congress  to  have 
foreseen  the  multitude  of  questions  depending  upon  the  special 
facts  presented  sometimes  in  one  complication  and  sometimes  in 
another,  and  declare  a  single  rule  applicable  to  each.  The  most 
that  it  couhl  do  would  be  to  declare  the  general  rules  to  indicate 
its  purpose  and  to  serve  as  guides  in  the  determination  of  ques- 
tions which  would  arise,  and  delegate  the  power  of  applying  them 
to  some  competent  public  agency  always  in  the  field  and  ready  to 


SEC.    III.]  LIMITATIOXS   ON    STATE    REGULATION.  237 

entertain  and  dispose  of  controversies.  And  it  is  indispensable  to 
this  power  that  the  commission  should  have  the  right  to  exercise 
its  judgment  and  to  form  conclusions  upon  the  facts.  To  enable 
it  to  do  this,  the  statute  provides  that  notice  shall  be  given  to  in- 
terested parties,  that  a  hearing  shall  be  had  and  proofs  taken.  We 
think  there  is  no  valid  constitutional  objection  to  the  law,  in  that 
legislative  powers  are  improperly  delegated.^' 


Section  3. 


Limitations  on  the  Power  of  the  State  in  Kate 
Regulation. 

MUJ^'N  V.  ILLINOIS. 
94  U.  S.  113.     1876.^ 

Mr.  Chief  Justice  Waite  delivered  the  opinion  of  the  court. 

It  is  insisted,  however,  that  the  owner  of  property  is  entitled  to 
a  reasonable  compensation  for  its  use,  even  though  it  be  clothed 
with  a  public  interest,  and  that  what  is  reasonable  is  a  judicial  and 
not  a  legislative  question. 

As  has  already  been  shown,  the  practice  has  been  otherwise.  In 
countries  where  the  common  law  prevails,  it  has  been  customary 
from  time  immemorial  for  the  legislature  to  declare  what  shall  be 
a  reasonable  compensation  under  such  circumstances,  or,  perhaps 
more  properly  speaking,  to  fix  a  maximum  beyond  which  any 
charge  made  would  be  unreasonable.  Undoubtedly,  in  mere  pri- 
vate contracts,  relating  to  matters  in  which  the  public  has  no  in- 
terest, what  is  reasonable  must  be  ascertained  judicially.  But  this 
is  because  the  legislature  has  no  control  over  such  a  contract.  So, 
too,  in  matters  which  do  affect  the  public  interest,  and  as  to  which 
legislative  control  may  be  exercised,  if  there  are  no  statutory  regu- 
lations upon  the  subject,  the  courts  must  determine  what  is  reason- 
able. The  controlling  fact  is  the  power  to  regulate  at  all.  If  that 
exists,  the  right  to  establish  the  maximum  of  charge,  as  one  of  the 
means  of  regulation,  is  implied.  In  fact,  the  common-law  rule, 
which  requires  the  charge  to  be  reasonable,  is  itself  a  regulation  as 

2  See  Interstate  Commerce  Act,  §  15,  as  amended  June  29,  1906,  Appendix, 
p.  504. 

See  Interstate  Com.  Com.  v.  Chicago.  R.  I.  &  P.  Ry.  Co.  (1910),  218  U.  S. 
88;  Interstate  Com.  Com.  i;.  Humboldt  S.  S.  Co.   (1912),  224  U.  S.  474. 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


238  KATES.  [chap.  IV. 

to  price.")  Without  it  the  owner  coidd  make  his  rates  at  will,  and 
compel  the  public  to  yield  to  his  terms,  or  forego  the  use. 

But  a  mere  common-law  regulation  of  trade  or  business  may  be 
changed  by  statute.  A  person  has  no  property,  no  vested  interest, 
in  any  rule  of  the  common  law.  That  is  only  one  of  the  forms  of 
municipal  law,  and  is  no  more  sacred  than  any  other.  |  Eights  of 
property  which  have  been  created  by  the  common  law^cannojb  be 
taken  away  without  due  process ;  but  the  law  itself,  as  a  rule  of  con- 
duct, may  be  changed  at  the  will,  or  even  at  the  whim,  of  the  leg- 
islature, unless  prevented  by  constitutional  limitationsy  Indeed, 
the  great  office  of  statutes  is  to  remedy  defects  in  the  common  law 
as  they  are  developed,  and  to  adapt  it  to  the  changes  of  time  and 
circumstances.  To  limit  the  rate  of  charge  for  services  rendered 
in  a  public  employment,  or  for  the  use  of  property  in  which  the 
public  has  an  interest,  is  only  changing  a  regulation  which  existed 
before.  It  establishes  no  new  principle  in  the  law,  but  only  gives 
a  new  effect  to  an  old  one. 

We  know  that  this  is  a  power  which  may  be  abused ;  but  that  is 
no  argument  against  its  existence.  For  protection  against  abuses 
by  legislatures  the  people  must  resort  to  the  polls,  not  to  the  courts.^ 


EEAGAN  V.  FAEMEKS'  LOAN  AND  TEUST  CO. 

154  U.  S.  362.     1894.^ 

Mr.  Justice  Brewer  delivered  the  opinion  of  the  court. 
It  appears  from  the  bill  that,  in  pursuance  of  the  powers  given 
to  it  by  this  act,  the  state  commission  has  made  a  body  of  rates  for 

2  See  Peik  v.  Chicago  &  N.  W.  Ry.  Co.   (1876),  94  U.  S.  164,  178. 

In  Stone  v.  Farmers'  L.  &  T.  Co.  (1885),  116  U.  S.  307,  the  following 
language  is  found  on  pages  330  and  331 :  .  „    ^   . 

"  In  Munn  v.  Illinois,  94  U.  S.  113,  and  Chicago,  Burlington  &  Qumcy 
Railroad  Co.  v.  Iowa  [94  U.  S.  155],  above  cited,  this  court  decided  that,  as 
to  natural  persons  and  corporations  subject  to  legislative  control,  the  State 
could,  in  cases  like  this,  fix  a  maximum  beyond  which  any  charge  would  be 
unreasonable,  and  that  such  maximum  when  fixed  would  be  binding  on  the 
courts  in  their  adjudications,  as  well  as  on  the  parties  in  their  dealings. 

"  From  what  has  thus  been  said,  it  is  not  to  be  inferred  that  this  power 
of  limitation  or  regulation  is  itself  without  limit.  This  power  to  regulate 
is  not  a  power  to  destroy,  and  limitation  is  not  the  equivalent  of  confisca- 
tion. Under  pretence  of  regulating  fares  and  freights,  the  State  cannot  re- 
quire a  railroad  corporation  to  carry  persons  or  property  without  reward; 
neither  can  it  do  that  which  in  law  amounts  to  a  taking  of  private  prop- 
erty for  public  use  without  just  compensation,  or  without  due  process  of 
law  What  would  have  this  effect  we  need  not  now  say,  because  no  tariff 
has  vet  been  fixed  by  the  commission,  and  the  statute  of  Mississippi  ex- 
pressly provides  '  that  in  all  trials  of  cases  brought  for  a  violation  of  any 
tariff  of  charges,  as  fixed  by  the  commission,  it  may  be  shown  m  defence  that 
such  tariff  so  fixed  is  unjust'  " 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion 
are  omitted. —  Ed. 


SEC.    III.]  LIMITATIONS    ON    STATE   KEGULATION.  239 

fares  and  freights.  This  body  of  rates,  as  a  whole,  is  challenged 
by  the  plaintiff  as  unreasonable,  unjust,  and  working  a  destruc- 
tion of  its  rights  of  property.  The  defendant  denies  the  power  of 
the  court  to  entertain  an  inquiry  into  that  matter;  insisting  that 
the  fixing  of  rates  for  carriage  by  a  public  carrier  is  a  matter  wholly 
within  the  power  of  the  legislative  department  of  the  government, 
and  beyond  examination  by  the  courts. 

It  is  doubtless  true,  as  a  general  proposition,  that  the  formation 
of  a  tariff  of  charges  for  the  transportation  by  a  common  carrier  of 
persons  or  property  is  a  legislative  or  administrative,  rather  than 
a  judicial,  function.     Yet  it  has  always  been  recognized  that,  if  a 
carrier  attempted  to  charge  a  shipper  an  unreasonable  sum,  the 
courts  had  jurisdiction  to  inquire  into  that  matter,  and  to  award 
to  the  shipper  any  amount  exacted  from  him  in  excess  of  a  rea- 
sonable rate,  and  also,  in  a  reverse  case,  to  render  judgment  in 
favor  of  the  carrier  for  the  amount  found  to  be  a  reasonable  charge. 
The  province  of  the  courts  is  not  changed,  nor  the  limit  of  judicial 
inquiry  altered,  because  the  legislature,  instead  of  the  carrier,  pre- 
scribes the  rates.   (Tlie  courts  are  not  authorized  to  revise  or  change 
the  body  of  rates  imposed  by  a  legislature  or  a  commission.     They 
do  not  determine  whether  one  rate  is  preferable  to  another,  or  what, 
under  all  circumstances,  would  be  fair  and  reasonable,  as  between 
the  carriers  and  the  shippers.)  They  do  not  engage  in  any  mere 
administrative  work.     But  still  there  can  be  no  doubt  of  their  power 
and  duty  to  inquire  whether  a  body  of  rates  prescribed  by  a  legis- 
lature or  a  commission  is  unjust  and  unreasonable,  and  such  as  to 
work  a  practical  destruction  to  rights  of  property,  and,  if  found  so 
to  be,  to  restrain  its  operation.     In  Chicago,  Burlington  &  Quincy 
Eailroad  v.  Iowa,  94  U.  S.  155,  and  Peik  v.  Chicago  &  Northwest- 
ern Railway,  94  U.  S.  164',  the  question  of  legislative  control  over 
railroads  was  presented ;  and  it  was  held  that  the  fixing  of  rates  was 
not  a  matter  within  the  absolute  discretion  of  the  carriers,  but  was 
subject  to  legislative  control.     As  stated  by  Mr.  Justice  ]\Iiller  in 
Wabash,  St.  L.  &  P.  Ey.  Co.  v.  Illinois,  118  U.  S.  557,  569,  in  re- 
spect to  those  cases : 

"  The  great  question  to  be  decided,  and  which  was  decided,  and 
which  was  argued  in  all  those  cases,  was  the  right  of  the  State 
within  which  a  railroad  company  did  business  to  regulate  or  limit 
the  amount  of  any  of  these  traffic  charges." 

There  was  in  those  cases  no  decision  as  to  the  extent  of  control, 
but  only  as  to  the  right  of  control.  This  question  came  again  before 
this  court  in  Eailroad  Commission  Cases,  116  U.  S.  307,  331;  and, 
while  the  right  control  was  reaffirmed,  a  limitation  on  that  right 
was  plainly  intimated  in  the  following  words  of  the  chief  justice : 


240  RATES.  [chap.   IV. 

"  From  what  has  thus  been  said,  it  is  not  to  be  inferred  that  this 
power  of  limitation  or  regulation  is  itself  without  limit.  This 
power  to  regulate  is  not  a  power  to  destroy,  and  limitation  is  not 
the  equivalent  of  confiscation.  Under  pretense  of  regulating  fares 
and  freights,  the  state  cannot  require  a  railroad  corporation  to  carry 
persons  or  property  without  reward.  Neither  can  it  do  that  which 
in  law  amounts  to  a  taking  of  private  property  for  public  use  with- 
out just  compensation,  or  without  due  process  of  law." 

This  language  was  quoted  in  the  subsequent  case  of  Dow  v.  Beidel- 
man,  125  U.  S.  680,  689.  Again,  in  Chicago,  M.  &  St.  P.  Ey  Co. 
V.  Minnesota,  134  U.  S.  418,  458,  it  was  said  by  Mr.  Justice  Blatch- 
ford,  speaking  for  the  majority  of  the  court : 

"  The  question  of  the  reasonableness  of  a  rate  of  charge  for 
transportation  by  a  railroad  company,  involving,  as  it  does,  the  ele- 
ment of  reasonableness,  both  as  regards  the  company  and  as  re- 
gards the  public,  is  eminently  a  question  for  judicial  investiga- 
tion, requiring  the  process  of  law  for  its  determination." 

And  in  Chicago  &  Grand  Trunk  Railway  v.  "Wellman,  143  U.  S. 
339^  344,  is  this  declaration  of  the  law: 

•'  The  legislature  has  power  to  fix  rates,  and  the  extent  of  judicial 
interference  is  protection  against  unreasonable  rates."; 

Budd  V.  New  York,  143  U.  S.  517,  announces  nothing  to  the 
contrary.  The  question  there  was  not  whether  the  rates  were  rea- 
sonable, but  whether  the  business,  that  of  elevating  grain,  was 
within  legislative  control  as  to  the  matter  of  rates.  It  was  said  in 
the  opinion :  "  In  the  cases  before  us  the  records  do  not  show  that 
the  charges  fixed  by  the  statute  are  unreasonable."  Hence,  there 
was  no  occasion  for  saying  anything  as  to  the  power  or  duty  of  the 
courts  in  case  the  rates,  as  established,  had  been  found  to  be  un- 
reasonable. It  was  enough  that,  upon  examination,  it  appeared  that 
there  was  no  evidence  upon  which  it  could  be  adjudged  that  the  rates 
were  in  fact  open  to  objection  on  that  ground." 

These  cases  all  support  the  proposition  that,  while  it  is  not  the 
province  of  the  courts  to  enter  upon  the  merely  administrative 
duty  of  framing  a  tariff  of  rates  for  carriage,  it  is  within  the  scope 
of  judicial  power,  and  a  part  of  judicial  duty,  to  restrain  anything 
which,  in  the  form  of  a  regulation  of  rates,  operates  to  deny  to  the 
owners  of  property  invested  in  the  business  of  transportation  that 
equal  protection  which  is  the  constitutional  right  of  all  owners  of 
other  property.  There  is  nothing  new  or  strange  in  this.  It  has 
always  been  a  part  of  the  judicial  function  to  determine  whether 
the  act  of  one  party  (whether  that  party  be  a  single  individual, 
an  organized  body,  or  the  public  as  a  whole)  operates  to  divest 
the  other  party  of  any  rights  of  person  or  property.     In  every  con- 


SEC.    III.]  LIMITATIONS    ON    STATE    REGULATION.  241 

stitution  is  the  guaranty  against  the  taking  of  private  property  for 
public  purposes  without  just  compensation.  The  equal  protection, 
of  the  laws,  which,  by  the  Fourteenth  xlmendment,  no  State  can 
deny  to  the  individual,  forbids  legislation,  in  whatever  form  it  may 
be  enacted,  by  which  the  property  of  one  individual  is,  without 
compensation,  wrested  from  him  for  the  benefit  of  another,  or  of 
the  public,  (j'his,  as  has  been  often  observed,  is  a  government  of 
law,  and  not  a  government  of  men  yand  it  must  never  be  forgotten 
that  under  such  a  government,  with  its  constitutional  limitations 
and  guaranties,  the  forms  of  law  and  the  machinery  of  government, 
with  all  their  reach  and  power,  must,  in  their  actual  workings,  stop 
on  the  hither  side  of  the  unnecessary  and  uncompensated  taking 
or  destruction  of  any  private  property,  legally  acquired  and  legally 
held.  It  was  therefore  within  the  competency  of  the  Circuit  Court 
of  the  United  States  for  the  Western  District  of  Texas,  at  the  in- 
stance of  the  plaintiff,  a  citizen  of  another  State,  to  enter  upon  an. 
inquiry  as  to  the  reasonableness  and  justice  of  the  rates  prescribed, 
by  the  railroad  commission.  Indeed,  it  was,  in  so  doing,  only  ex- 
ercising a  power  expressly  named  in  the  act  creating  the  commission. 

A  classification  was  made  by  the  commission,  and  difi^erent  rates 
established  for  difi'erent  kinds  of  goods.  These  rates  were  pre- 
scribed by  successive  circulars.  Classification  of  rates  is  based  on 
several  considerations,  such  as  bulk,  value,  facility  of  handling,  etc. 
It  is  recognized  in  the  management  of  all  railroads,  and  no  com- 
plaint is  here  made  of  the  fact  of  classification,  or  the  way  in 
which  it  was  made  by  the  commission.  By  these  circulars,  rates 
all  along  the  line  of  classification  were  reduced  from  those  thereto- 
fore charged  on  the  road.  The  challenge  in  this  case  is  of  the 
tarifl^  as  a  whole,  and  not  of  any  particular  rate  upon  any  single 
class  of  goods.  As  we  have  seen,  it  is  not  the  function  of  the  courts 
to  establish  a  schedule  of  rates.  It  is  not,  therefore,  within  our 
power  to  prepare  a  new  schedule,  or  rearrange  this.  Our  inquiry 
is  limited  to  the  effect  of  the  tariff  as  a  whole,  including  therein 
the  rates  prescribed  for  all  the  several  classes  of  goods,  and  the  de- 
cree must  either  condemn  or  sustain  this  act  of  quasi  legislation, 
(if  a  law  be  adjudged  invalid,  the  court  may  not,  in  the  decree,  at- 
tempt to  enact  a  law  upon  the  same  subject  which  shall  be  obnoxious 
to  no  legal  objections.  It  stops  with  simply  passing  its  judgment 
on  the  validity  of  the  act  before  it.  The  same  rule  obtains  in  a 
case  like  this^' 

And  now  what  deductions  are  fairly  to  be  drawn  from  all  the 
facts  before  us?  Is  there  anything  which  detracts  from  the  force 
of  the  general  allegation  that  these  rates  are  unjust  and  unreason- 
able?    This  clearly  appears.     The  cost  of  this  railroad  property 


242  RATES.  [chap.  IV. 

was  $40,000,000.     It  cannot  be  replaced  to-day  for  less  than  $25,- 
000,000.     There  are  $15,000,000  of  mortgage  bonds  outstanding 
against  it,  and  nearly  $10,000,000  of  stock.     These  bonds  and  stock 
represent  money  invested  in  the  construction  of  this  road.     The 
owners  of  the  stock  have  never  received  a  dollar's  worth  of  divi- 
dends in  return  for  their  investment.     The  road  was  thrown  into 
the  hands  of  a  receiver  for  default  in  payment  of  'the  interest  on 
the  bonds.     The  earnings  for  the  last  three  years  prior  to  the  es- 
tablishment of  these  rates  was  insufficient  to  pay  the  operating 
expenses  and  the  interest  on  the  bonds.     In  order  to  make  good 
the  deficiency  in  interest,  the  stockholders  have  put  their  hands  in 
their  pockets,  and  advanced  over  a  million  of  dollars.     The  sup- 
plies for  the  road  have  been  purchased  at  as  cheap  a  rate  as  pos- 
sible.    The  officers  and  employes  have  been  paid  no  more  than  is 
necessary  to  secure  men  of  the  skill  and  knowledge  requisite  to 
suitable  operation  of  the  road.     By  the  voluntary  action  of  the  com- 
pany the  rate,  in  cents,  per  ton,  per  mile,  has  decreased  in  10  years 
from  2.03  to  1.30.     The  actual  reduction  by  virtue  of  this  tariff 
in  the  receipts  during  the  six  or  eight  months  that  it  has  been  en- 
forced amounts  to  over  $150,000.     Can  it  be  that  a  tariff  which, 
under  these  circumstances,  has  worked  such  results  to  the  parties 
whose  money  built  this  road,  is  other  than  unjust  and  unreason- 
able?    Would  any  investment  ever  be  made  of  private  capital  in 
railroad  enterprises  with  such  as  the  proffered  results  ? 

It  is  unnecessary  to  decide,  and  we  do  not  wish  to  be  understood 
as  laying  down  as  an  absolute  rule,  that  in  every  case  a  failure  to 
produce  some  profit  to  those  who  have  invested  their  money  in  the 
building  of  a  road  is  conclusive  that  the  tariff  is  unjust  and  un- 
reasonable. And  yet  justice  demands  that  every  one  should  re- 
ceive some  compensation  for  the  use  of  his  money  or  property,  if 
it  be  possible  without  prejudice  to  the  rights  of  others.  There  may 
be  circumstances  which  would  justify  such  a  tariff.  There  may 
have  been  extravagance,  and  a  needless  expenditure  of  money. 
There  may  be  waste  in  the  management  of  the  road,  enormous  sal- 
aries, unjust  discrimination  as  between  individual  shippers,  result- 
ing in  general  loss.  The  construction  may  have  been  at  a  time 
when  material  and  labor  were  at  the  highest  price,  so  that  the  actual 
cost  far  exceeds  the  present  value.  The  road  may  have  been  un- 
wisely built,  in  localities  where  there  is  no  sufficient  business  to 
sustain  a  road.  Doubtless,  too,  there  are  many  other  matters  af- 
fecting the  rights  of  the  community  in  which  the  road  is  built,  as 
well  as  the  rights  of  those  who  have  built  the  road. 

But  we  do  hold  that  a  general  averment  in  a  bill  that  a  tariff, 
as  established,  is  unjust  and  unreasonable,  is  supported  by  the  ad- 


SEC.    III.]  LIMITATIONS    OX    STATE    REGULATION.  243 

mitted  facts  that  the  road  cost  far  more  than  the  amount  of  the 
stock  and  bonds  outstanding;  that  such  stock  and  bonds  represent 
money  invested  in  its  construction;  that  there  has  been  no  waste 
or  mismanagement  in  the  construction  or  operation;  that  supplies 
and  labor  have  been  purchased  at  the  lowest  possible  price  con- 
sistent with  the  successful  operation  of  the  road;  that  the  rates 
voluntarily  fixed  by  the  company  have  been  for  10  years  steadily 
decreasing,  until  the  aggregate  decrease  has  been  more  than  50 
per  cent.;  that,  under  the  rates  thus  voluntarily  established,  the 
stock,  which  represents  two-fifths  of  the  value,  has  never  received 
anything  in  the  way  of  dividends,  and  that  for  the  last  three 
years  the  earnings  above  operating  expenses  have  been  insufficient 
to  pay  the  interest  on  the  bonded  debt,  and  that  the  proposed  tarifE, 
as  enforced,  will  so  diminish  the  earnings  that  they  will  not  be 
able  to  pay  one-half  the  interest  on  the  bonded  debt  above  the  op- 
erating expenses ;  and  that  such  an  averment,  so  supported,  will, 
in  the  absence  of  any  satisfactory  showing  to  the  contrary,  sustain 
a  finding  that  the  proposed  tariff  is  unjust  and  unreasonable,  and 
a  decree  restraining  it  being  put  in  force. 

It  follows  from  these  considerations  that  the  decree,  as  entered, 
must  be  reversed^  in  so  far  as  it  restrains  the  railroad 
commission  from  discharging  the  duties  imposed  by  this  act, 
and  from  proceeding  to  establish  reasonable  rates  and  regula- 
tions, but  must  be  affirmed  so  far  only  as  it  restrains  the  de- 
fendants from  enforcing  the  rates  already  established.  The 
costs  in  this  court  will  be  divided. 


SjMYTH  v.  AMES. 
169  U.  S.  4G6.     1898.^ 

Each  of  these  suits  was  brought  July  28,  1893,  and  involves 
the  constitutionality  of  an  act  of  the  legislature  of  Nebraska  ap- 
proved by  the  governor  April  12,  1893,  and  which  took  effect  Au- 
gust 1,  1893.  It  was  an  act  "to  regulate  railroads,  to  classify 
freights,  to  fix  reasonable  maximum  rates  to  be  charged  for  the 
transportation  of  freights  upon  each  of  the  railroads  in  the  state 
of  Nebraska,  and  to  provide  penalties  for  the  violation  of  this  act." 
Acts  Neb.  1893,  c.  24 ;  Comp.  St.  Neb.  1893,  c.  72,  art.  12.  The  act 
is  referred  to  in  the  record  as  "  House  Eoll  33." 

Mr.  Justice  Harlan  delivered  the  opinion  of  the  court. 

1  Most  of  the  statement  of  facts,  all  of  the  arguments  of  counsel  and  part 
of  the  opinion  are  omitted. —  Ed. 


24-1:  RATES.  [chap.    IV. 

We  are  now  to  inquire  whether  the  Nebraska  statute  is  repugnant 
to  the  constitution  of  the  United  States. 

By  the  fourteenth  amendment  it  is  provided  that  no  state  shall 
deprive  any  person  of  property  without  due  process  of  law,  nor  deny 
to  any  person  within  its  jurisdiction  the  equal  protection  of  the 
laws.     That  corporations  are  persons  within  the  meaning  of  this 
Amendment  is  now  settled.     Santa  Clara  Co.  v.  Southern  Pacific 
Eailroad,  118  U.  S.  394,  396;  Charlotte,  Columbia  &  Augusta  Eail- 
road  V.  Gibbes,  142  U.  S.  386,  391;  Gulf,  Colorado  &  Santa  Fe 
Eailway  v.  Ellis,  165  U.  S.  150,  154.     What  amounts  to  deprivation 
of  property  without  due  process  of  law,  or  what  is  a  denial  of  the 
equal  protection  of  the  laws,  is  often  difficult  to  determine,  espe- 
cially where  the  question  relates  to  the  property  of  a  quasi  public 
corporation,  and  the  extent  to  which  it  may  be  subjected  to  public 
control.     But  this  court,  speaking  by  Chief  Justice  Waite,  has  said 
that,  while  the  State  has  power  to  fix  the  charges  by  railroad  com- 
panies for  the  transportation  of  persons  and  property  within  its 
own  jurisdiction,  unless  restrained  by  valid  contract,  or  unless  what 
is  done  amounts  to  a  regulation  of  foreign  or  interstate  commerce, 
such  power  is  not  without  limit;  and  that,  "under  pretense  of 
regulating  fares  and  freights,  the  State  cannot  require  a  railroad 
corporation  to  carry  persons  or  property  without  reward,  neither 
can  it  do  that  which  in  law  amounts  to  the  taking  of  private  prop- 
erty for  public  use  without  just  compensation,  or  without  due  proc- 
ess of  law.'V  Eailroad  Commission  Cases,  116  U.  S.  307,  325,  331. 
This  principle  was  recognized  in  Dow  v.  Beidelman,  125  U.  S.  680, 
689,  and  has  been  reaffirmed  in  other  cases.     In  Georgia  Eailroad 
&  Banking  Co.  v.  Smith,  128  U.  S.  174,  179,  it  was  said  that  the 
power  of  the  State  to  prescribe  the  charges  of  a  railroad  company 
for  the  carriage  of  persons  and  merchandise  within  its  limits  —  in 
the  absence  of  any  provision  in  the  charter  of  the  company  consti- 
tuting a  contract  vesting  it  with  authority  over  those  matters  — 
was  "  subject  to  the  limitation  that  the  carriage  is  not  required  with- 
out reward,  or  upon  conditions  amounting  to  the  taking  of  prop- 
erty for  public  use  without  just  compensation;  and  that  what  is 
done  does  not  amount  to  a  regulation  of  foreign  or  interstate  com- 
merce."    In  Chicago,  Milwaukee  &  St.  Paul  Eailway  v.  Minnesota, 
134  U.  S.,  418,  458,  it  was  said :     "  If  the  company  is  deprived  of 
the  power  of  charging  reasonable  rates  for  the  use  of  its  prop- 
erty, and  such  deprivation  takes  place  in  the  absence  of  an  investi- 
gation by  judicial  machinery,  it  is  deprived  of  the  lawful  use  of  its 
property,  and  thus,  in  substance  and  effect,  of  the  property  itself, 
without  due  process  of  law,  and  in  violation  of  the  Constitution  of 
the  United  States ;  and,  in  so  far  as  it  is  thus  deprived,  while  other 


SEC.    III.]  LIMITATIONS    ON    STATE   REGULATION.  245 

persons  are  permitted  to  receive  reasonable  profits  upon  their  in- 
vested capital,  the  company  is  deprived  of  the  equal  protection  of 
the  laws."  In  Chicago  &  Grand  Trunk  Railway  v.  Wellman,  143 
TJ.  S.  339,  344,  the  court,  in  answer  to  the  suggestion  that  the  legis- 
lature had  no  authority  to  prescribe  maximum  rates  for  railroad 
transportation,  said  that  "the  legislature  has  power  to  fix  rates, 
and  the  extent  of  judicial  interference  is  protection  against  unrea- 
sonable rates."  In  Budd  v.  New  York,  143  U.  S.  517,  547,  the 
court,  while  sustaining  tlie  power  of  Xew  York  by  statute  to  regu- 
late charges  to  be  exacted  at  grain  elevators  and  warehouses,  in  that 
State,  took  care  to  state,  as  a  result  of  former  decisions,  that  such 
power  was  not  one  "  to  destroy  or  a  power  to  compel  the  doing  of 
the  ser%dces  without  reward,  or  to  take  private  property  for  pub- 
lic use  without  just  compensation  or  without  due  process  of  law."  ^ 
So,  in  St.  Louis  &  San  Francisco  Eailway  v.  Gill,  156  U.  S.  649, 
657,  it  was  said  that  "there  is  a  remedy  in  the  courts  for  relief 
against  legislation  establishing  a  tariff  of  rates  which  is  so  unreason- 
able as  to  practically  destroy  the  value  of  property  of  companies  en- 
gaged in  the  carrying  business,  and  that  especially  may  the  courts  of 
the  United  States  treat  such  a  question  as  a  judicial  one,  and  hold 
such  acts  of  legislation  to  be  in  conflict  with  the  Constitution  of 
the  United  States,  as  depriving  the  companies  of  their  property 
without  due  process  of  law,  and  as  depriving  them  of  the  equal  pro- 
tection of  the  laws.^'  In  Covington  &  Lexington  Turnpike  Eoad 
Co.  V.  Sandford,  164  U.  S.  578,  584,  594-595,  597,  which  involved 
the  validity  of  a  state  enactment  prescribing  rates  of  toll  on  a  turn- 
pike road,  the  court  said :  "  A  statute  which,  by  its  necessary  op- 
eration, compels  a  turnpike  company,  when  charging  only  such  tolls 
as  are  just  to  the  public,  to  submit  to  such  further  reduction  of  rates 
as  will  prevent  it  from  keeping  its  road  in  proper  repair,  and  from 
earning  any  dividends  whatever  for  stockholders,  is  as  obnoxious  to 
the  Constitution  of  the  United  States  as  would  be  a  similar  statute 
relating  to  the  business  of  a  railroad  corporation  having  authority, 
under  its  charter,  to  collect  and  receive  tolls  for  passengers  and 
freight."  And  in  Chicago,  Burlington  &  Quincy  Eailroad  v.  City 
of  Chicago,  166  U.  S.  226,  241,  it  was  held  that  "a  judgment  of 
a  state  court,  even  if  it  be  authorized  by  statute,  whereby  private 
property  is  taken  for  the  State  or  under  its  direction  for  public  use, 
without  compensation  made  or  secured  to  the  owner,  is  upon  prin- 
ciple and  authority  wanting  in  the  due  process  of  law  required  by 
the  Fourteenth  Amendment  of  the  Constitution  of  the  United 
States,  and  the  affirmance  of  such  judgment  by  the  highest  court  of 

2  A   paragraph  dealing  with  Reagan  v.   Farmers'   L.   &  T.   Co.,  supra,  is 
here  omitted. —  Ed. 


246  RATES.  [chap.  IV. 

the  State  is  a  denial  by  that  State  of  a  right  secured  to  the  owner 
by  that  instrument." 

In  view  of  the  adjudications  these  principles  must  be  regarded 
as  settled: 

1.  A  railroad  corporation  is  a  person  within  the  meaning  of  the 
Fourteenth  Amendment  declaring  that  no  State  shall  deprive  any 
person  of  property  without  due  process  of  law,  nor  deny  to  any 
person  within  its  jurisdiction  the  equal  protection  of  the  laws. 

2.  A  state  enactment,  or  regulations  made  under  the  authority 
of  a  state  enactment,  establishing  rates  for  the  transportation  of 
persons  or  property  by  railroad  that  will  not  admit  of  the  carrier 
earning  such  compensation  as,  under  all  the  circumstances,  is  just 
to  it  and  to  the  public,  would  deprive  such  carrier  of  its  property 
without  due  process  of  law,  and  deny  to  it  the  equal  protection  of 
the  laws,  and  would,  therefore,  be  repugnant  to  the  Fourteenth 
Amendment  of  the. Constitution  of  the  United  States. 

3.  While  rates  for  the  transportation  of  persons  and  property 
within  the  limits  of  a  State  are  primarily  for  its  determination,  the 
question  whether  they  are  so  unreasonably  low  as  to  deprive  the 
carrier  of  its  property  without  such  compensation  as  the  Constitu- 
tion secures,  and  therefore  without  due  process  of  law,  cannot  be 
so  conclusively  determined  by  the  legislature  of  the  State,  or  by 
regulations  adopted  under  its  authority,  that  the  matter  may  not 
become  the  subject  of  judicial  inquiry. 

The  cases  before  us  directly  present  the  important  question  last 
stated. 

It  is  said  by  the  appellants  that  the  local  rates  established  by  the 
Nebraska  statute  are  much  higher  than  in  the  State  of  Iowa,  and 
that  fact  shows  that  the  Nebraska  rates  are  reasonable.  This  con- 
tention was  thus  met  by  the  Circuit  Court :  "  It  is,  however,  urged 
by  the  defendants  that  in  the  general  tariffs  of  these  companies, 
there  is  an  inequality;  that  the  rates  in  Nebraska  are  higher  than 
those  in  adjoining  States ;  and  that  the  reduction  by  House  Roll  33 
simply  establishes  an  equality  between  Nebraska  and  the  other  States 
through  which  the  roads  run.  The  question  is  asked,  Are  not  the 
people  of  Nebraska  entitled  to  as  cheap  rates  as  the  people  of 
Iowa?  Of  course,  relatively  they  are.  That  is,  the  roads  may  not 
discriminate  against  the  people  of  any  one  State,  but  they  are  not 
necessarily  bound  to  give  absolutely  the  same  rates  to  the  people 
of  all  the  States,  for  the  kind  and  amount  of  business  and  the  cost 
thereof  are  factors  which  determine  largely  the  question  of  rates, 
and  these  vary  in  the  several  States.  The  volume  of  business  in 
one  State  may  be  greater  per  mile,  while  the  cost  of  construction  and 
of  maintenance  is  less;  hence,  to  enforce  the  same  rates  in  both 


SEC.    III.]  LIMITATIONS    ON    STATE   REGULATION.  247 

States  might  result  in  great  injustice  in  one,  while  it  would  only  be 
reasonable  and  fair  in  another.  Comparisons,  therefore,  between 
the  rates  of  two  States,  are  of  little  value,  unless  all  the  elements 
that  enter  into  the  problem  are  presented.  It  may  be  true,  as  tes- 
tified by  some  of  the  witnesses,  that  the  existing  local  rates  in  Ne- 
braska are  40  per  cent,  higher  than  similar  rates  in  the  State  of 
Iowa.  But  it  is  also  true  that  the  mileage  earnings  in  Iowa  are 
greater  than  in  Nebraska.  In  Iowa  there  are  230  people  to  each 
mile  of  railroad,  while  in  Nebraska  there  are  but  190;  and,  as  a 
general  rule,  the  more  people  there  are  the  more  business  there  is. 
Hence  a  mere  difference  between  the  rates  in  two  States  is  of  com- 
paratively little  significance."  64  Fed.  165.  In  these  views  we 
concur,  and  it  is  unnecessary  to  add  anything  to  what  was  said 
by  the  Circuit  Court  on  this  point. 

It  is  further  said,  in  behalf  of  the  appellants,  that  the  reason- 
ableness of  the  rates  established  by  the  Nebraska  statute  is  not  to 
be  determined  by  the  inquiry  whether  such  rates  would  leave  a 
reasonable  net  profit  from  the  local  business  affected  thereby,  but 
that  the  court  should  take  into  consideration,  among  other  things, 
the  whole  business  of  the  company ;  that  is,  all  its  business,  passen- 
ger and  freight,  interstate  and  domestic.  If  it  be  found  upon  in- 
vestigation that  the  profits  derived  by  a  railroad  company  from  its 
interstate  business  alone  are  sufficient  to  cover  operating  expenses 
on  its  entire  line,  and  also  to  meet  interest,  and  justify  a  liberal 
dividend  upon  its  stock,  may  the  legislature  prescribe  rates  for  do- 
mestic business  that  would  bring  no  reward,  and  be  less  than  the 
services  rendered  are  reasonably  worth?  Or  must  the  rates  for 
such  transportation  as  begins  and  ends  in  the  State  be  established 
with  reference  solely  to  the  amount  of  business  done  by  the  carrier 
wholly  within  such  State,  to  the  cost  of  doing  such  local  business 
and  to  the  fair  value  of  the  property  used  in  conducting  it,  with- 
out taking  into  consideration  the  amount  and  cost  of  its  interstate 
business,  and  the  value  of  the  property  employed  in  it  ?  If  we  do 
not  misapprehend  counsel,  their  argument  leads  to  the  conclusion 
that  the  State  of  Nebraska  could  legally  require  local  freight  busi- 
ness to  be  conducted  even  at  an  actual  loss,  if  the  company  earned 
on  its  interstate  business  enough  to  give  it  just  compensation  in 
respect  of  its  entire  line  and  all  its  business,  interstate  and  domes- 
tic. We  cannot  concur  in  this  view.  In  our  judgment,  it  must  be 
held  that  the  reasonableness  or  unreasonableness  of  rates  pre- 
scribed by  a.  State  for  the  transportation  of  persons  and  property 
wholly  within  its  limits  must  be  determined  without  reference 
to  the  interstate  business  done  by  the  carrier,  or  to  the  profits  de- 
rived from  it.     The  State  cannot  justify  unreasonably  low  rates 


248  RATES,  [chap.    IV. 

for  domestic  transportation,  considered  alone,  upon  the  ground 
that  the  carrier  is  earning  large  profits  on  its  interstate  business, 
over  which,  so  far  as  rates  are  concerned,  the  State  has  no  control/ 
Nor  can  the  carrier  justify  unreasonably  high  rates  on  domestic 
business  upon  the  ground  that  it  will  be  able  only  in  that  way  to 
meet  losses  on  its  interstate  business.  So  far  as  rates  of  trans- 
portation are  concerned,  domestic  business  should  not  be  made  to 
bear  the  losses  on  interstate  business,  nor  the  latter  the  losses  on 
domestic  business.  It  is  only  rates  for  the  transportation  of  per- 
sons and  property  between  points  within  the  State  that  the  State 
can  prescribe;  and  when  it  undertakes  to  prescribe  rates  not  to  be 
exceeded  by  the  carrier  it  must  do  so  with  reference  exclusively 
to  what  is  Just  and  reasonable,  as  between  the  carrier  and  the  pub- 
lic, in  respect  of  domestic  business.  The  argument  that  a  railroad 
line  is  an  entirety;  that  its  income  goes  into,  and  its  expenses  are 
provided  for,  out  of  a  common  fund;  and  that  its  capitalization  is 
on  its  entire  line,  within  and  without  the  State,  can  have  no  ap- 
plication where  the  State  is  without  authority  over  rates  on  the 
entire  line,  and  can  only  deal  with  local  rates,  and  make  such  regu- 
lations as  are  necessary  to  give  just  compensation  on  local  busi- 
ness.^ 

It  appears,  from  what  has  been  said,  that  if  the  rates  prescribed 
by  the  act  of  1893  had  been  in  force  during  the  years  ending  June 
30,  1891,  1892,  and  1893,  the  Fremont  Company,  in  the  years  end- 
ing June  30,  1891,  and  June  30,  1893,  and  the  Union  Pacific 
Company,  in  the  years  ending  June  30,  1892,  and  June  30,  1893, 
would  each  have  received  more  than  enough  to  pay  operating  ex- 
penses. Do  those  facts  affect  the  general  conclusion  as  to  the 
probable  effect  of  the  act  of  1893  ?  In  the  discussion  of  this 
question  the  plaintiffs  contended  that  a  railroad  company  is  en- 
titled to  exact  such  charges  for  transportation  as  will  enable  it 
at  all  times  not  only  to  pay  operating  expenses,  but  also  to  meet 
the  interest  regularly  accruing  upon  all  its  outstanding  obligations, 
and  justify  a  dividend  upon  all  its  stock;  and  that  to  prohibit  it 
from  maintaining  rates  or  charges  for  transportation  adequate 
to  all  those  ends  will  deprive  it  of  its  property  without  due  process 
of  law,  and  deny  to  it  the  equal  protection  of  the  laws.  This  con- 
tention was  the  subject  of  elaborate  discussion,  and,  as  it  bears 
upon  each  case  in  its  important  aspects,  it  should  not  be  passed 
without  examination. 

3  For  a  discussion  of  what  regulation  is  entirely  without  the  power  of  the 
States,  what  regulation  is  entirely  subject  to  their  control,  and  what  regula- 
tion may  be  indulged  in  1)V  them  until  such  time  as  Congress  shall  legis- 
late on  the  subject,  see  Minnesota  Hate  Cases  (1913),  230  U.  S.  352,  398 
et  seq. 


SEC.    III.]  LIMITATIONS    ON    STATE   REGULATION.  2i9 

In  our  opinion,  the  broad  proposition  advanced  by  counsel  in- 
volves some  misconception  of  the  relations  between  the  public  and 
a  railroad  corporation.  It  is  unsound,  in  that  it  practically  ex- 
cludes from  consideration  the  fair  value  of  the  property  used,  omits 
altogether  any  consideration  of  the  right  of  the  public  to  be  ex- 
empt from  unreasonable  exactions,  and  makes  the  interests  of  the 
corporation  maintaining  a  public  highway  the  sole  test  in  deter- 
mining whether  the  rates  established  by  or  for  it  are  such  as  may 
be  rightfully  prescribed  as  between  it  and  the  public.  (A  railroad 
is  a  public  highway,  and  none  the  less  so  because  constructed  and 
maintained  through  the  agency  of  a  corporation  deriving  its  exist- 
ence and  powers  from  the  State.  Such  a  corporation  was  created 
for  public  purposes.  It  performs  a  function  of  the  State.  Its 
authority  to  exercise  the  right  of  eminent  domain  and  to  charge 
tolls  was  given  primarily  for  the  benefit  of  the  public.  It  is  under 
governmental  control,  though  such  control  must  be  exercised  with 
due  regard  to  the  constitutional  guaranties  for  the  protection  of  its 
property!;  Olcott  v.  The  Supervisors,  16  Wall.  678,  694;  Sinking 
Fund  Cases,  99  U.  S.  700,  719;  Cherokee  Nation  v.  Southern  Kan. 
Ey.  Co.,  135  U.  S.  641,  657.  It  cannot,  therefore,  be  admitted 
that  a  railroad  corporation  maintaining  a  highway  under  the  author- 
ity of  the  State  may  fix  its  rates  with  a  view  solely  to  its  own  in- 
terests, and  ignore  the  rights  of  the  public.  But  the  rights  of  the 
public  would  be  ignored  if  rates  for  the  transportation  of  persons 
or  property  on  a  railroad  are  exacted  without  reference  to  the  fair 
value  of  the  property  used  for  the  public,  or  the  fair  value  of  the 
services  rendered,  but,  in  order  simply  that  the  corporation  may 
meet  operating  expenses,  pay  the  interest  on  its  obligations,  and 
declare  a  dividend  to  stockholders. 

If  a  railroad  corporation  has  bonded  its  property  for  an  amount 
that  exceeds  its  fair  value,  or  if  its  capitalization  is  largely  ficti- 
tious, it  may  not  impose  upon  the  public  the  burden  of  such  in- 
creased rates  as  may  be  required  for  the  purpose  of  realizing  profits 
upon  such  excessive  valuation  or  fictitious  capitalization ;  and  the 
apparent  value  of  the  property  and  franchises  used  by  the  corpora- 
tion, as  represented  by  its  stocks,  bonds,  and  obligations,  is  not 
alone  to  be  considered  when  determining  the  rates  that  may  be  rea- 
sonably charged. 

,'  We  hold,  however,  that  the  basis  of  all  calculations  as  to  the 
reasonableness  of  rates  to  be  charged  by  a  corporation  maintaining 
a  highway  under  legislative  sanction  must  be  the  fair  value  of  the 
property  being  used  by  it  for  the  convenience  of  the  public.  And, 
in  order  to  ascertain  that  value,  the  original  cost  of  construction, 
the  amount  expended   in   permanent   improvements,   the   amount 


250  KATES.  [chap.   IV. 

and  market  value  of  its  bonds  and  stock,  the  present  as  compared 
with  the  original  cost  of  construction,  the  probable  earning  capac- 
ity of  the  property  under  particular  rates  prescribed  by  statute, 
and  the  sum  required  to  meet  operating  expenses,  are  all  matters 
for  consideration,  and  are  to  be  given  such  weight  as  may  be  Just 
and  right  in  each  case.  We  do  not  say  that  there  may  not  be 
other  matters  to  be  regarded  in  estimating  the  value  of  the  prop- 
erty. .What  the  company  is  entitled  to  ask  is  a  fair  return  upon  the 
value  of  that  which  it  employs  for  the  public  convenience.  On  the 
other  hand,  what  the  public  is  entitled  to  demand  is  that  no  more 
be  exacted  from  it  for  the  use  of  a  public  highway  than  the  services 
rendered  by  it  are  reasonably  worth.  But  even  upon  this  basis, 
and  determining  the  probable  effect  of  the  act  of  1893  by  ascer- 
taining what  could  have  been  its  effect  if  it  had  been  in  operation 
during  the  three  years  immediately  preceding  its  passage,  we  per- 
ceive no  ground  on  the  record  for  reversing  the  decree  of  the  Cir- 
cuit Court.  On  the  contrary,  we  are  of  opinion  that  as  to  most  of 
the  companies  in  question  there  would  have  been,  under  such  rates 
as  were  established  by  the  act  of  1893,  an  actual  loss  in  each  of 
the  years  ending  June  30,  1891,  1892,  and  1893 ;  and  that,  in  the 
exceptional  cases  above  stated,  when  two  of  the  companies  would 
have  earned  something  above  operating  expenses  in  particular  years, 
the  receipts  or  gains,  above  operating  expenses,  would  have  been 
too  small  to  affect  the  general  conclusion  that  the  act,  if  enforced, 
would  have  deprived  each  of  the  railroad  companies  involved  in 
these  suits  of  the  just  compensation  secured  to  them  by  the  Con- 
stitution. Under  the  evidence,  there  is  no  ground  for  saying  that 
the  operating  expenses  of  any  of  the  companies  were  greater  than 
necessary. 


SOUTHERN  EAILWAY  CO.  v.  ATLANTA  STOVE  WORKS. 

128  Ga.  207.     1907.^ 

The  Railroad  Commission  of  Georgia,  after  making  a  general 
schedule  of  intra-state  rates  for  the  railroads  of  the  State,  made 
a  supplementary  order  contained  in  Circular  309,  establishing  rates 
for  the  carriage  of  stoves  and  fixtures  between  certain  named  points. 
The  Southern  Railway  Company  refused  to  carry  for  the  Atlanta 
Stove  Works  according  to  the  rates  fixed  by  such  circular,  and  the 
latter  brought  this  action  for  mandamus. 

Evans,  J.     Many  adjudications  of  courts  of  last  resort  have 

1  The  statement  of  facts  has  been  condensed  and  part  of  the  opinion  is 
omitted. —  Ed. 


SEC.    III.]  LIMITATIONS    OX    STATE    REGULATION'.  251 

established  the  proposition  that  the  presumption  is  that  the  rates 
fixed  by  the  Commission  are  reasonable,  and  the  burden  of  proof 
is  upon  the  railroad  companies  to  show  the  contrai}-.  Dow  v. 
Beidelman,  125  U.  S.  680;  Chicago,  etc.,  Ey.  Co.  v.  Tompkins, 
176  U.  S.  167;  Minn.  &  St.  L.  K.  Co.  v.  Minnesota,  186  U.  S. 
257.  The  plaintiff  in  error  contends  that  circular  309  bears  in- 
ternal evidence  of  the  unreasonableness  of  the  rates.  No  factor 
appears  in  this  circular  which  may  not  properly  enter  into  the 
problem  of  rate  making.  The  circular  does  not  fix  an  isolated 
and  independent  rate  apart  from  the  whole  body  of  rates,  but 
amends  the  general  schedule  to  the  extent  of  its  provisions.  It 
is  a  matter  of  common  knowledge  in  the  traffic  world  that  ap- 
parently insignificant  causes  sometimes  influence  the  moving  of 
traffic.  Freight  heretofore  passing  over  the  road  of  one  carrier 
is  perceptibly  diverted  in  another  direction  or  transported  by  a 
different  carrier.  The  carrier's  traffic  agent  is  ever  alert  to  dis- 
cover the  cause  of  the  diversion  of  profitable  business,  and,  when 
such  cause  is  supposed  to  be  discovered,  to  arrange  or  readjust  his 
tariff  schedules  in  such  a  manner  as  to  secure  what  may  have  been 
lost,  as  well  as  to  increase  the  public  patronage  of  his  road.  Bate 
fixing  is  impossible  of  being  resolved  into  an  exact  science,  because 
of  the  inharmony  of  basing  criteria  in  different  localities,  and  even 
in  the  same  territory.  Many  factors  must  be  considered  in  one  in- 
stance which  are  wholly  lacking  in  another  case.  Out  of  the  dis- 
similarity of  potential  criteria  in  establishing  rates  grew  the  prin- 
ciple of  classification.  Classification  has  been  extended  to  the 
character  of  the  railroad,  localities,  commodities,  amount  of  traffic, 
and  many  other  conditions  which  directly  affect  the  moving  of 
traffic.  In  the  recent  treatise  of  Beale  and  Wyman  on  Railroad 
Rate  Regulation,  in  chapter  18,  the  authors  have  grouped  under 
topical  heads  some  general  bases  of  commodity  classification,  such 
as  comparison  of  commodities,  convenience  in  handling,  value  of 
the  goods,  car  load  rates,  and  difference  in  rate  between  classes. 
Classification  of  commodities  into  classes  is  there  said  to  be  allow- 
able so  long  as  it  is  not  disproportionate.  After  discussing  several 
decisions  rendered  by  the  Interstate  Commerce  Commission,  at  sec- 
tion 607,  it  is  said  that  "  the  principle  to  be  deduced  from  the 
cases  which  have  just  been  discussed  is  that  the  differences  in  rates 
between  the  classes  in  a  classification  should  not  be  dispropor- 
tionate." From  the  necessity  of  the  case,  where  so  many  elements 
are  obliged  to  be  considered  in  fixing  a  commodity  rate  as  part 
of  the  general  schedule  of  rates,  it  is  impracticable  to  fix  a  single 
commodity  rate  without  reference  to  rates  of  other  commodities, 
as  well  as  other  factors  that  properly  may  enter  into  the  estimate. 


J 

252  EATES.  [chap.  IV. 

Chicago,  etc.,  Ey.  Co.  v.  Tompkins,  176  U.  S.  167.  In  the  case  of 
Minneapolis  &  St.  Louis  E.  E.  Co.  v.  Minnesota,  186  U.  S.  257, 
the  reasonableness  of  the  rate  on  coal  between  two  intrastate  points 
was  under  review.  The  railroad  company  contended  that  this  par- 
ticular rate  on  a  tonnage  basis  would  render  freight  transporta- 
tion receipts  less  than  actual  operating  expenses.  Testimony  was 
submitted  to  sustain  this  contention.  The  court,  speaking  through 
Mr.  Justice  Brown,  said :  "  The  principal  testimony,  however,  was 
intended  to  show  that,  if  the  rate  fixed  by  the  Commission  for  coal 
in  car  load  lots  were  applied  to  all  freight,  the  road  would  not 
pay  its  operating  expenses,  although  in  making  this  showing  the 
interest  upon  the  bonded  debt  and  the  dividends  were  included  as 
part  of  the  operating  expenses.  But  it  so  appears  that,  if  the  old 
rate  upon  hard  coal  in  car  load  lots  agreed  upon  by  the  roads  were 
adopted  as  an  average  rate  for  all  freights,  the  freight  earnings  of 
the  road  would  have  been  largely  increased.  This  would  indicate 
that  the  rate  fixed  for  coal  must  have  been  above  the  average  rate, 
although  coal  is  classified  as  far  below  the  average.  It  is  quite 
evident  that  this  testimony  has  but  a  slight,  if  any,  tendency  to 
show  that  even  at  the  rates  fixed  by  the  Commission  there  would 
not  still  be  a  reasonable  profit  upon  coal  so  carried."  And 
further  @n  in  the  same  opinion  it  was  said:  "We  do  n®t  think 
it  bey®nd  the  power  of  the  State  Cemmissien  to  reduce  the  freight 
upon  a  particular  article,  provided  the  cempanies  are  able  t®  earn 
a  fair  prafit  upon  their  entire  business,  and  that  the  burden  is 
upon  them  to  impeach  the  action  ©f  the  Cemmissien  in  this  par- 
ticular." As  epigrammatically  put  in  Smyth  v.  Ames,  169  U.  S. 
547 :  "  What  the  cempany  is  entitled  t@  ask  is  a  fair  return  upon 
the  value  ©f  that  which  it  employs  for  tbe  public  convenience.  On 
the  other  hand,  what  the  public  is  entitled  to  demand  is  that  no 
more  be  exacted  from  it  for  the  use  of  a  public  highway  than  the 
services  rendered  by  it  are  reasonably  worth."  We  do  not  see  how 
this  result  can  be  obtained  except  from  an  application  of  the  whole 
body  of  rates  to  the  railroad's  entire  business  within  this  State. 

(Again,  if  the  railroad  company  be  permitted  to  contest  the  rea- 
sonableness of  an  individual  commodity  rate  apart  from  the  whole 
body  of  rates,  the  courts  would  be  called  on  to  fix  and  establish 
independent  rates  for  different  commodities.  The  courts  would  be 
at  the  beck  and  call  of  every  carrier  in  the  State  to  revise,  change, 
or  modify  some  particular  rate.  The  courts  have  no  such  power. 
"  The  courts  are  not  authorized  to  revise  or  change  the  body  of 
rates  imposed  by  a  legislature  or  a  commission.  They  do  not 
determine  whether  one  rate  is  preferable  to  another,  or  what  un- 
der all  the  circumstances  would  be  fair  and   reasonable   as  be- 


SEC.    III.]  LIMITATIONS    OX    STATE   REGULATION.  253 

tween  the  carriers  and  the  shippers.  /They  do  not  engage  in  any 
mere  administrative  work,  but  still  There  can  be  no  doubt  of 
their  power  and  duty  to  inquire  whether  a  body  of  rates  pre- 
scribed by  a  legislature  or  a  commission  is  unjust  and  unrea- 
sonable, and  such  as  to  work  a  practical  destruction  of  rights  of 
property,  and,  if  found  so  to  be,  to  restrain  its  operation.^  Eeagan 
V.  Farmers'  Loan  &  Trust  Co.,  154  U.  S.  3G2.  The  commission 
fixes  a  schedule  of  rates.  Some  commodity  rates  are  higher  than 
others,  and  necessarily  so.  The  entire  body  of  rates  are  prescribed 
with  respect  to  their  inter-relation.  The  low  rate  is  presumably 
fixed  with  reference  to  the  higher  rate,  and  conversely ;  and  a  partic- 
ular rate  cannot  be  said  to  be  unreasonable  without  showing  it  to  be 
such  when  taken  in  connection  with  the  whole  body  of  rates.  We 
therefore  reach  the  conclusion  that  the  averment  of  the  fifteenth 
paragraph  of  the  amended  answer,  "that  the  rates  prescribed  by 
circular  309  are  unreasonable,  in  that  the  amount  earned  by  your 
petitioner  in  the  transportation  of  the  articles  covered  by  309  be- 
tween the  points  therein  prescribed  would  be  less  than  the  cost  of 
service/'  fails  to  raise  an  issue  of  fact.  Since  conceding  the  truth 
of  the  averment,  for  the  reasons  given  above,  the  rate  therein  pre- 
scribed is  not  alleged  to  be  unreasonable  as  a  part  of  the  whole 
body  of  rates  prescribed  by  the  Commission.- 


NORTHEEN  PACIFIC  EAILWAY  CO.  v.  NORTH 

DAKOTA.  .^    ^o./ 

35  Sup.  St.  Rep.  429.     191.5.*         ^      ' 

Mr.  Justice  Hughes  delivered  the  opinion  of  the  court. 

By  chapter  51  of  the  Laws  of  1907,  the  legislature  of  North 
Dakota  fixed  maximum  intrastate  rates,  graduated  according  to 
distance,  for  the  transportation  of  coal  in  carload  lots.  It  was  ^ 
further  pro^^ded  that  in  case  the  transportation  was  over  two  or 
more  lines  of  railroad  it  should  be  considered  as  one  haul,  the  com- 
pensation for  which  should  be  divided  among  the  carriers  accord- 
ing to  their  agreement,  or,  if  they  could  not  agree,  as  the  railroad 
commissioners  should  decide,  subject  to  appeal  to  the  courts.  "While 
the  statutory  rates  governed  all  coal  shipments,  their  practical  ap- 
plication was  almost  solely  to  lignite  coal. 

As  to  the  law,  the  state  court  held : 

"  (a)   The  statutory  freight  rate  is  presumed  to  be  reasonable, 

2  See  Missouri  Pac.  R.  R.  Co.  v.  Smith  (1895),  60  Ark.  221. 
1  Part  of  the  opinion  is  omitted. —  Ed. 


254  RATES.  [chap.    IV. 

which  presumption  continues  until  the  contrary  appears  and  the 
rate  is  shown  beyond  a  reasonable  doubt  to  be  confiscatory. 

"(b)  Proof  that  a  rate  is  noncompensatory  —  that  is,  while 
producing  more  revenue  than  sufficient  to  pay  the  actual  expenses 
occasioned  by  the  transportation  of  the  commodity,  but  insufiicient 
to  also  reimburse  for  that  proportion  of  the  railroad's  fixed  or  over- 
head costs  properly  apportionable  to  such  commodity  carried  — 
is  not  sufiicient  to  establish  that  the  rate  is  confiscatory  in  law. 

"(c)  In  order  to  establish  such  a  noncompensatory  rate  to  be 
confiscatory,  it  must  further  appear  that  any  deficit  under  the  rate 
affects  the  net  intrastate  freight  earnings  materially,  and  reduces 
them  to  a  point  where  they  are  insufficient  to  amount  to  a  rea- 
sonable rate  of  profit  on  the  amount  of  the  value  of  the  railroad 
property  within  the  state  contributing  to  produce  such  net  earn- 
ings." 

(  The  general  principles  to  be  applied  are  not  open  to  contro- 
versy. The  railroad  property  is  private  property  devoted  to  a  pub- 
lic use.  As  a^corporation,  the  owner  is  subject  to  the  obligations  of 
its  charter.  'As  the  holder  of  special  franchises,  it  is  subject  to 
the  conditions  upon  which  they  were  granted.  Aside  from  specific 
requirements  of  this  sort,  the  common  carrier  must  discharge  the 
obligations  which  inhere  in  the  nature  of  its  business.  It  must 
I  supply  facilities  that  are  reasonably  adequate ;  it  must  carry  upon 
!  reasonable  terms ;  and  it  must  serve  without  unjust  discrimination j 
These  duties  are  properly  called  public  duties,  and  the  state,  within 
the  limits  of  its  jurisdiction,  may  enforce  them.  The  state  may 
prescribe  rules  to  insure  fair  remuneration  and  to  prevent  ex- 
tortion, to  secure  substantial  equality  of  treatment  in  like  cases, 
and  to  promote  safety,  good  order,  and  convenience.  ^ 

But,  broad  as. is  the  power  of  regulation,  the  state  does  not  en- 
joy the  freedom  of  an  owner.  The  fact  that  the  property  is  de- 
voted to  a  public  use  on  certain  terms  does  not  justify  the  re- 
quirement that  it  shall  be  devoted  to  other  public  purposes,  or 
to  the  same  use  on  other  terms,  or  the  imposition  of  re- 
strictions that  are  not  reasonably  concerned  with  the  proper 
conduct  of  the  business  according  to  the  undertaking  which 
the  carrier  has  expressly  or  impliedly  assumed.  If  it  has 
held  itself  out  as  a  carrier  of  passengers  only,  it  cannot  be 
compelled  to  carry  freight.  As  a  carrier  for  hire,  it  cannot  be 
required  to  carry  persons  or  goods  gratuitously^  The  case  would 
not  be  altered  by  the  assertion  that  the  public  interest  demanded 
such  carriage.  The  public  interest  cannot  be  invoked  as  a  justifi- 
cation for  demands  which  pass  the  limits  of  reasonable  protection, 
and  seek  to  impose  upon  the  carrier  and  its  property  burdens  that 


SEC.    III.]  LIMITATIONS    ON    STATE   REGULATION.  255 

are  not  incident  to  its  engagement.  In  such  a  case,  it  would  be 
no  answer  to  say  that  the  carrier  obtains  from  its  entire  intrastate 
business  a  return  as  to  the  sufficiency  of  which  in  the  aggregate 
it  is  not  entitled  to  complain. 

We  have,  then,  to  apply  these  familiar  principles  to  a  case  where 
the  state  has  attempted  to  fix  a  rate  for  the  transportation  of  a 
commodity  under  which,  taking  the  results  of  the  business  to  which 
the  rate  is  applied,  the  carrier  is  compelled  to  transport  the  com- 
modity for  less  than  cost,  or  without  substantial  compensation  in 
addition  to  cost.  We  say  this,  for  we  entertain  no  doubt  that,  in 
determining  the  cost  of  the  transportation  of  a  particular  com- 
modity, all  the  outlays  which  pertain  to  it  must  be  considered.  We 
find  no  basis  for  distinguishing  in  this  respect  between  so-called 
''  out-of-pocket  costs,"  or  "  actual "  expenses,  and  other  outlays 
which  are  none  the  less  actually  made  because  they  are  applicable 
to  all  traffic,  instead  of  being  exclusively  incurred  in  the  traffic  in 
question.  Illustrations  are  found  in  outlays  for  maintenance  of 
way  and  structures,  general  expenses  and  taxes.  It  is  not  a  suffi- 
cient reason  for  excluding  such,  or  other,  expenses  to  say  that 
they  would  still  have  been  incurred  had  the  particular  conunodity 
not  been  transported.  That  commodity  has  been  transported;  the 
common  carrier  is  under  a  duty  to  carry,  and  the  expenses  of  its 
business  at  a  particular  time  are  attributable  to  what  it  does  carry.] 
The  state  cannot  estimate  the  cost  of  carrying  coal  by  throwing 
the  expense  incident  to  the  maintenance  of  the  roadbed,  and 
the  general  expenses,  upon  the  carriage  of  wheat;  or  the  cost  of 
carrying  wheat  by  throwing  the  burden  of  the  upkeep  of  the  prop- 
erty upon  coal  and  other  commodities.  This,  of  course,  does  not 
mean  that  all  commodities  are  to  be  treated  as  carried  at  the 
same  rate  of  expense.  The  outlays  that  exclusively  pertain  to  a 
given  class  of  traffic  must  be  assigned  to  that  class,  and  the  other 
expenses  must  be  fairly  apportioned.  It  may  be  difficult  to  make 
such  an  apportionment,  but  when  conclusions  are  based  on  cost, 
the  entire  cost  must  be  taken  into  account. 

It  should  be  said,  further,  that  we  find  nothing  in  the  record 
before  us,  and  nothing  in  the  facts  which  have  been  set  forth  with 
the  most  careful  elaboration  by  the  state  court,  that  can  be  taken 
to  indicate  the  existence  of  any  standard  whatever  by  reference  to 
which  the  rate  in  question  may  be  considered  to  be  reasonable. 
It  does  not  appear  that  there  has  been  any  practice  of  the  carriers 
in  jSTorth  Dakota  which  afl'ords  any  semblance  of  support  to  a  rate 
so  low.  Whatever  inference  may  be  deduced  from  coal  rates  in 
other  states,  as  disclosed  by  the  record,  is  decidedly  against  the 
reasonableness  of  the  rate.     And  it  may  be  added  that,  while  the 


256  RATES.  [chap.  IV. 

rate  was  found  to  be  compensatory  in  the  case  of  the  Great  North- 
ern Eailway  Company,  this  was  distinctly  shown  to  be  due  to  the 
peculiar  conditions  of  the  traffic  over  that  road,  the  differences 
with  respect  to  which  were  fully  detailed  by  the  state  court.  26 
N".  D.  pp.  439,  472-480,  145  N.  W.  135.  Nearly  90  per  cent,  of 
the  total  intrastate  traffic  in  lignite  coal  upon  the  three  roads  was 
over  the  lines  of  the  plaintiff's  in  error.  It  is  urged  by  the  state 
that  the  commodity  in  question  is  one  of  the  lowest  classes  of 
freight.  This  may  be  assumed,  and  it  may  be  a  good  reason  for 
a  lower  rate  than  that  charged  for  carrying  articles  of  a  different 
sort,  but  the  mere  grade  of  the  commodity  cannot  be  regarded  as 
furnishing  a  sufficient  ground  for  compelling  the  carrier  to  trans- 
port it  for  less  than  cost,  or  without  substantial  reward. 

The  state  insists  that  the  enactment  of  the  statute  may  be  justi- 
fied as  "  a  declaration  of  public  policy."  In  substance,  the  argu- 
ment is  that  the  rate  was  imposed  to  aid  in  the  development  of 
a  local  industry,  and  thus  to  confer  a  benefit  upon  the  people  of  the 
state.  The  importance  to  the  community  of  its  deposits  of  lignite 
coal,  the  infancy  of  the  industry,  and  the  advantages  to  be  gained 
by  increasing  the  consumption  of  this  coal  and  making  the  com- 
munity less  dependent  upon  fuel  supplies  imported  into  the  state, 
are  emphasized.  'But,  while  local  interests  serve  as  a  motive  for 
enforcing  reasonable  rates,  it  would  be  a  very  different  matter 
to  say  that  the  state  may  compel  the  carrier  to  maintain  a  rate 
upon  a  particular  commodity  that  is  less  than  reasonable,  or  —  as 
might  equally  well  be  asserted  —  to  carry  gratuitously,  in  order  to 
build  up  a  local  enterpriseJ  That  would  be  to  go  outside  the 
carrier's  undertaking,  and  outside  the  field  of  reasonable  super- 
vision of  the  conduct  of  its  business,  and  would  be  equivalent  to 
an  appropriation  of  the  property  to  public  uses  upon  terms  to 
which  the  carrier  had  in  no  way  agreed.  It  does  not  aid  the 
argument  to  urge  that  the  state  may  permit  the  carrier  to  make 
good  its  loss  by  charges  for  other  transportation.  If  other  rates 
are  exorbitant,  they  may  be  reduced.  Certainly,  it  could  not  be 
said  that  the  carrier  may  be  required  to  charge  excessive  rates  to 
some  in  order  that  others  might  be  served  at  a  rate  unreasonably 
low.  That  would  be  but  arbitrary  action.  We  cannot  reach  the 
conclusion  that  the  rate  in  question  is  to  be  supported  upon  the 
ground  of  public  policy  if,  upon  the  facts  found,  it  should  be 
deemed  to  be  less  than  reasonable. 

The  legislature  undoubtedly  has  a  wide  range  of  discretion  in 
the  exercise  of  the  power  to  prescribe  reasonable  charges,  and  it 
is  not  l)ound  to  fix  uniform  rates  for  all  commodities,  or  to  secure 
the  same  percentage  of  profit  on  every  sort  of  business.     There 


SEC.    III.]  LIMITATIONS    ON    STATE   REGULATION,  257 

are  many  factors  to  be  considered, —  differences  in  the  articles  trans- 
ported, the  care  required,  the  risk  assumed,  the  value  of  the  service, 
and  it  is  obviously  important  that  there  should  be  reasonable  ad- 
justments and  classifications.  Nor  is  its  authority  hampered  by 
the  necessity  of  establishing  such  minute  distinctions  that  the  ef- 
fective exercise  of  the  rate-making  power  becomes  impossible.  It  is 
not  bound  to  prescribe  separate  rates  for  every  individual  service 
performed,  but  it  may  group  services  by  fixing  rates  for  classes  of 
traffic.  As  repeatedly  observed,  we  do  not  sit  as  a  revisory  board 
to  substitute  our  judgment  for  that  of  the  legislature,  or  its 
administrative  agent,  as  to  matters  within  its  province.  San  Diego 
Land  &  Town  Co.  v.  Jasper,  189  U.  S.  439;  Louisville  &  N.  E. 
Co.  V.  Garrett,  231  U.  S.  298,  313.  The  court,  therefore,  is  not 
called  upon  to  concern  itself  with  mere  details  of  a  schedule;  or 
to  review  a  particular  tariff  or  schedule  which  yields  substantial 
compensation  for  the  services  it  embraces,  when  the  profitableness 
of  the  intrastate  business  as  a  whole  is  not  involved. 

But  a  different  question  arises  when  the  state  has  segregated  a 
commodity,  or  a  class  of  traffic,  and  has  attempted  to  compel  the 
carriers  to  transport  it  at  a  loss  or  without  substantial  compensa- 
tion, even  though  the  entire  traffic  to  which  the  rate  is  applied 
is  taken  into  account.  On  that  fact  being  satisfactorily  estab- 
lished, the  presumption  of  reasonableness  is  rebutted.  If  in  such 
a  case  there  exists  any  practice,  or  what  may  be  taken  to  be  (broadly 
speaking)  a  standard  of  rates  with  respect  to  that  traffic,  in  the 
light  of  which  it  is  insisted  that  the  rate  should  still  be  regarded 
as  reasonable,  that  should  be  made  to  appear.  As  has  been  said,  it 
does  not  appear  here.  Frequently,  attacks  upon  state  rates  have 
raised  the  question  as  to  the  profitableness  of  the  entire  intrastate 
business  under  the  state's  requirements.  But  the  decisions  in  this 
class  of  cases  (which  we  have  cited  in  the  margin^)  furnish  no 
ground  for  saying  that  the  state  may  set  apart  a  commodity  or  a 
special  class  of  traffic  and  impose  upon  it  any  rate  it  pleases,  pro- 
vided only  that  the  return  from  the  entire  intrastate  business  is 

2  Stone  V.  Farmers'  Loan  &  T.  Co.,  116  U.  S.  307;  Dow  v.  Beidelman, 
125  U.  S.  680,  690 :  Chicago  &  G.  T.  R.  Co.  v.  Wellman,  143  U.  S.  339.  341 ; 
Reagan  v.  Farmers'  Loan  &  T.  Co..  154  U.  S.  302;  Covington  &  L.  Tump. 
Road  Co.  V.  Sandford,  164  U.  S.  578;  Smyth  v.  Ames,  169  U.  S.  466;  San 
Diego  Land  &  Town  Co.  v.  National  City,  174  U.  S.  739 ;  Chicago,  M.  &  St.  P. 
R.  Co.  V.  Tompkins,  176  U.  S.  167;  San  Diego  Land  &  Town  Co.  v.  Jasper, 
supra;  Stanislaus  County  v.  San  .Joaquin  &  K.  River  Canal  &  Irrig.  Co., 
192  U.  S.  201 ;  Knoxville  v.  Knoxville  Water  Co..  212  U.  S.  1 ;  Wilcox  v. 
Consolidated  Gas  Co.,  212  U.  S.  19;  Cedar  Rapids  Gaslight  Co.  v.  Cedar 
Rapids,  223  U.  S.  6&5 ;  Louisville  v.  Cumberland  Teleph.  &  Teleg.  Co..  225 
U.  S.  430;  Minnesota  Rate  Cases  (Simpson  v.  Shepard),  2.30  U.  S.  352, 
4SS;  Missouri  Rate  Cases  (Knott  v.  Chicago.  B.  &  Q.  R.  Co.),  230  U.  S. 
474,  497;  Southern  P.  Co.  v.  Campbell,  230  U.  S.  537;  Allen  v.  St.  Louis, 
I.  M.  &  S.  R.  Co.,  230  U.  S.  553.  556. 


258  KATES.  [chap.  IV. 

adequate.     In  St.  Louis  &  S.  F.  R.  Co.  v.  Gill,  156  U.  S.  649,  a 
statute   fixing   a   maximum   rate   for   passengers   in    the   state   of 
/Arkansas  was  challenged,  but  the  allegation  and  offer  of  proof 
that  the  rate  would  compel  the  carriage  of  passengers  at  a  loss 
related  only  to  a  portion,  or  division,  of  the  railroad,  and  not  to 
the  result  of  all  the  traffic  to  which  the  rate  in  question  applied. 
The  holding  that  this  was  insufficient  was  in  entire  accord  with 
the  above-stated  principle, —  that  the  rate-making  power  may  be 
exercised  in  a  practical  way,  and  that(the  legislature  is  not  bound 
to  assure  a  net  profit  from  "  every,  mile,  section,  or  other  part  into 
which  the  road  might  be  divided."     Id.  p.  665.     A  passenger  rate 
may  apply  generally  throughout  the  state,  and  the  effect  of  the 
rate  must  be  considered  with  respect  to  the  whole  business  governed 
by  the  rate.     In  Smyth  v.  Ames,  169  U.  S.  466,  a  schedule  of  freight 
rates  was  involved,  and,  while  the  entire  schedule  was  under  consid- 
eration, it  was  recognized  that  in  order  to  determine  its  adequacy 
the  intrastate  freight  business  might  be  segregated.     Id.  pp.  535, 
550.     The  case  of  Minneapolis  &  St.  L.  R.  Co.  v.  Minnesota,  186 
U.  S.  257,  involved  a  rate  fixed  by  the  Railroad  and  Warehouse 
Commission  of  the  State  of  Minnesota  for  the  intrastate  transporta- 
tion of  hard  coal  in  carload  lots.     There  was  no  proof  that  the  cai- 
rier  was  compelled  to  transport  the  coal  at  a  loss  or  without  substan- 
tial compensation.     The  principal  testimony,  as  the  court  observed, 
was  intended  to  show  that  "if  the  rate  fixed  by  the  commission 
for  coal  in  carload  lots  were  applied  to  all  freight,  the  road  would 
not  pay  its  operating  expenses,  although  in  making  this  showing 
the  interest  upon  the  bonded  debt  and  the  dividends  were  included 
as  part  of  the  operating  expenses."     It  was  said  that  it  was  "  quite 
evident"  that  this  testimony  had  "but  a  slight,  if  any,  tendency 
to  show  that  even  at  the  rates  fixed  by  the  commission  there  would 
not  still  be  a  reasonable  profit  upon  coal  so  carried"  (id.  p.  266)  ; 
and  this  conclusion  effectually  distinguishes  the  case  from  the  one 
at  bar. 

To  repeat  and  conclude :  It  is  presumed  —  but  the  presumption 
is  a  rebuttable  one  —  that  the  rates  which  the  state  fixes  for  in-. 
trastate  traffic  are  reasonable  and  just.  When  the  question  is  as 
to  the  profitableness  of  the  intrastate  business  as  a  whole  under  a 
general  scheme  of  rates,  the  carrier  must  satisfactorily  prove  the 
fair  value  of  the  property  employed  in  its  intrastate  business,  and 
show  that  it  has  been  denied  a  fair  return  upon  that  value.  With 
respect  to  particular  rates,  it  is  recognized  that  there  is  a  wide 
field  of  legislative  discretion,  permitting  variety  and  classification, 
and  hence  the  mere  details  of  what  appears  to  be  a  reasonable 
scheme  of  rates,  or  a  tariff  or  schedule  affording  substantial  com- 


SEC.    III.]  LIMITATIONS    ON    STATE    KEGULATION.  25^ 

pensation,  are  not  subject  to  judicial  review.  But  this  legislative 
power  cannot  be  regarded  as  being  without  limit.  (The  consti- 
tutional guaranty  protects  the  carrier  from  arbitrary  action  and 
from  the  appropriation  of  its  property  to  public  purposes  outside 
the  undertaking  assumed;  and  where  it  is  established  that  a  com- 
modity, or  a  class  of  traffic,  has  been  segregated  and  a  rate  im- 
posed which  would  compel  the  carrier  to  transport  it  for  less  than 
the  proper  cost  of  transportation,  or  virtually  at  cost,  and  thus 
the  carrier  would  be  denied  a  reasonable  reward  for  its  service  after 
taking  into  account  the  entire  traffic  to  which  the  rate  applies,  it 
must  be  concluded  that  the  state  has  exceeded  its  authority^ 

The  judgments,  respectively,  are  reversed,  and  the  cases  are  re- 
manded for  further  proceedings  not  inconsistent  with  this  opinion. 

It  is  so  ordered.^ 

Mr.  Justice  Pitney  dissents. 


CITY    OF    MINNEAPOLIS    v.    MINNEAPOLIS     STEEET 
RAILWAY  CO. 

215  U.  S.  417.     1910.^ 

Mr.  Justice  Day  delivered  the  opinion  of  the  court. 

This  is  an  appeal  from  a  decree  of  the  circuit  court  of  the 
United  States  for  the  district  of  Minnesota,  enjoining  the  city  of 
Minneapolis  from  enforcing,  as  against  the  Minneapolis  Street 
Railway  Company,  appellee,  a  certain  ordinance  of  the  city  of 
Minneapolis,  passed  February  9,  1907,  prescribing  the  rate  of  fare 
for  the  transportation  of  passengers  over  any  street  railway  line, 
or  lines,  of  the  company  in  the  city  of  Minneapolis. 

The  case  was  tried  upon  amended  bill  and  answer.  The  ground 
alleged  for  injunction  in  the  amended  bill  was  in  substance  that 
the  ordinance  of  February  9,  1907,  violated  the  terms  of  a  previous 
and  subsisting  contract,  prescribing  the  rates  of  fare  to  be  charged 
by  the  company  in  the  city  of  Minneapolis.  It  appears  in  the 
record  that  the  railway  company  was  organized  on  July  1,  1873, 
and  that  its  alleged  contract  arises  from  an  ordinance  of  the  city 
of  Minneapolis  passed  July  9,  1875,  ratified  by  an  act  of  the  leg- 
islature of  the  state  of  Minnesota  passed  March  4,   1879.     We 

3  See  Norfolk  &  W.  Ry.  Co.  v.  Conley  (1915),  35  Sup.  Ct.  R.  437;  Penn- 
sylvania R.  R.  Co.  r.  Philadelphia  County  (1908),  220  Pa.  St.  100. 

Compare  the  opinion  of  Mr.  Justice  Brewer  in  Cotting  v.  Kansas  City 
S.  Y.  Co.   (1901),  183  U.  S.  79. 

1  The  arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


260  EATES.  [chap.    IV. 

shall  have  occasion  later  on  to  deal  more  specifically  with  this  or- 
dinance and  ratifying  act. 

It  is  sufficient  for  the  present  purpose  to  say  that  it  is  the  con- 
tention of  the  company,  that,  by  the  ordinance  of  July  9,  1875, 
and  the  ratifying  act,  it  became  the  owner  of  an  irrepealable  con- 
tract for  the  term  of  fifty  years  from  the  date  of  its  organization, 
by  the  terms  of  which  it  had  the  right  to  charge  a  fare  not  ex- 
ceeding 5  cents  for  each  person  carried  on  any  continuous  line  which 
might  be  designated  by  the  city  council  of  the  city,  such  continuous 
line,  however,  not  to  exceed  3  miles  in  length.  The  contract,  it 
is  alleged,  is  violated  by  the  ordinance  of  February  9,  1907,  re- 
quiring the  sale  of  six  tickets  for  25  cents. 

We  therefore  reach  the  conclusion  that  when  the  ordinance  com- 
plained of,  that  of  February  9,  1907,  was  enacted  by  the  city 
council,  the  company  was  the  owner  of  a  valuable  contract  right 
secured  to  it  by  the  ordinance  of  July,  1875,  ratified  by  the  enact- 
ment of  the  legislature  of  the  state  of  Minnesota  on  March  4,  1879, 
which  secured  to  the  company  for  fifty  years  from  July  1,  1873, 
the  contract  right  to  charge  5  cents  per  passenger  for  one  con- 
tinuous trip.  We  think  that  the  requirement  of  the  ordinance,  that 
the  company  should  operate  its  roads  by  the  sale  of  tickets  six  for 
a  quarter,  as  required  by  the  ordinance  of  February  9,  1907,  was 
an  enactment  by  legislative  authority  which  impaired  the  obliga- 
tion of  the  contract  thus  held  and  owned  by  the  complainant  com- 
pany. We  therefore  reach  the  conclusion  that  the  decree  of  the 
Circuit  Court  enjoining  the  execution  of  the  ordinance,  for  the  rea- 
sons stated,  should  be  affirmed.^ 


HOME    TELEPHONE    AND    TELEGRAPH    CO.    v.    CITY 
OF  LOS  ANGELES. 

211  U.  S.  265.     1908.^ 

Mr.  Justice  Moody  delivered  the  opinion  of  the  court. 

This  is  a  suit  in  equity  brought  in  the  Circuit  Court  of  the  United 
States  by  the  appellant,  a  telephone  company,  against  the  city 
of  Los  Angeles  and  its  officers.  The  object  of  the  suit  is  to 
restrain  the  enforcement  of  certain  ordinances  which  fixed  the 
rates  to  be  charged  for  telephone  service;  required  every  person, 
firm,  or  corporation  supplying  telephone  service  to  furnish  annually 

2  See  City  of  Cleveland  v.  Cleveland  C.  Rv.  Co.  (1904).  194  U.  S.  517; 
Vicksburg  v.  Vicksburg  W.  W.  Co.    (1907),  20G  U.  S.  490. 

1  The  arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


SEC.    III.]  LIMITATIONS    ON    STATE    REGULATION.  261 

to  the  city  council  a  statement  of  the  revenue  from,  and  expendi- 
tures in,  the  business,  and  an  itemized  inventory  of  the  property 
used  in  the  business,  with  its  cost  and  value;  and  provided  a 
penalty  for  charges  in  excess  of  the  rates  fixed  and  for  failure  to 
furnish  the  required  statements.  The  defendants  demurred  to 
the  bill,  the  demurrer  was  sustained,  and  an  appeal  was  taken 
directly  to  this  court  on  the  constitutional  questions,  wliich  will 
be  stated. 

The  ordinances  complained  of  were  enacted  by  virtue  of  the 
powers  contained  in  §  31  of  the  city  charter,  which  is  as  follows: 

"  (Sec.  31.)  The  council  shall  have  power,  by  ordinance,  to 
regulate  and  provide  for  lighting  of  streets,  laying  down  gas  pipes, 
and  erection  of  lamp-posts,  electric  towers,  and  other  apparatus, 
and  to  regulate  the  sale  and  use  of  gas  and  electric  light,  and  fix 
and  determine  the  price  of  gas  and  electric  light,  and  the  rent 
of  gas  meters  within  the  city  and  regulate  the  inspection  thereof, 
and  to  regulate  telephone  service,  and  the  use  of  telephones  within 
the  city,  and  to  fix  and  determine  the  charges  for  telephones  and 
telephone  service  and  connections;  and  to  prohibit  or  regulate  the 
erection  of  poles  for  telegraph,  telephone,  or  electric  wire  in  the 
public  grounds,  streets,  or  alleys,  and  the  placing  of  wire  thereon; 
and  to  require  the  removal  from  the  public  grounds,  streets,  or 
alleys  of  any  or  all  such  poles,  and  the  removal  and  placing  under 
ground  of  any  or  all  telegraph,  telephone,  or  electric  wires." 

It  was  decided  by  the  judge  of  the  court  below,  and  is  agreed 
by  the  parties,  that  this  section  of  the  charter  conferred  upon  the 
city  council,  in  conformity  with  the  Constitution  and  laws  of  the 
state  of  California,  the  power  to  prescribe  charges  for  telephone 
service.  JSTot  doubting  the  correctness  of  this  view,  we  accept  it 
without  extended  discussion.  The  power  to  fix,  subject  to  consti- 
tutional limits,  the  charges  of  such  a  business  as  the  furnishing  to 
the  public  of  telephone  service,  is  among  the  powers  of  govern- 
ment, is  legislative  in  its  character,  continuing  in  its  nature,  and 
capable  of  being  vested  in  a  municipal  corporation. 

The  company,  however,  insists  that  the  city,  having  the  authority 
so  to  do,  has  contracted  with  it  that  it  may  maintain  the  charges 
for  service  at  a  specified  standard,  and  that,  as  the  rates  pre- 
scribed in  the  ordinances  complained  of  are  less  than  that  standard, 
the  ordinances  therefore  impair  the  obligation  of  the  contract,  in 
violation  of  the  Constitution  of  the  United  States.  This  is  the 
first  question  to  be  considered,  and  the  facts  out  of  which  the 
contention  arises  are  alleged  in  the  bill  and  admitted  by  the  de- 
murrer. 

The  company  obtained  its  franchise  under  the  provisions  of  a 


263  RATES.  [chap.  IV. 

statute  of  the  state  enacted  March  11,  1901  (Stat.  1901,  p.  265), 
which  was  later  than  the  adoption  of  §  31  of  the  city  charter.  By 
proceedings  conforming  to  this  statute  a  franchise  to  construct 
and  operate  a  telephone  system  for  fifty  years  was  sold  to  M. 
Adrian  King,  which,  by  assignment,  assented  to  by  the  city,  came 
into  the  hands  of  the  plaintiff  company,  which  constructed  the 
works  and  has  since  operated  them.  The  franchise  was  granted 
by  an  ordinance.  In  the  view  we  take  of  the  case  we  need  do 
no  more  than  state  very  briefly  the  main  features  of  the  ordinance, 
ilt  grants  a  franchise  for  fifty  years,  which  is  to  be  enjoyed  in  ac- 
Icordance  with  terms  and  conditions  named,  stipulates  for  certain 
free  service  for  the  city,  and  the  payment  to  it,  after  five  years,  of  2 
per  cent  of  the  gross  receipts,  and  provides  that  the  charges  for 
service  shall  not  exceed  specified  amounts.) 

This  ordinance,  enacted  by  the  city  council,  which  exercises  the 
legislative  and  business  powers  of  the  city,  and,  as  has  been  shown, 
the  charter  power  of  regulating  telephone  service  and  of  fixing  the 
charges,  contains,  it  is  contended,  the  contract  whose  obligation 
the  subsequent  ordinances  fixing  lower  rates  impaired.  Two  ques- 
tions obviously  arise  here.  Did  the  city  council  have  the  power  to 
enter  into  a  contract  fixing,  unalterably,  during  the  term  of  the 
franchise,  charges  for  telephone  service,  and  disabling  itself  from 
exercising  the  charter  power  of  regulation?  If  so,  was  such  a  con- 
tract in  fact  made?  The  first  of  these  two  questions  calls  for 
earlier  consideration,  for  it  is  needless  to  consider  whether  a 
contract  in  fact  was  made  until  it  is  determined  whether  the 
authority  to  make  the  contract  was  vested  in  the  city. 

It  has  been  settled  by  this  court  that  the  state  may  authorize 
one  of  its  municipal  corporations  to  establish,  by  an  inviolable  con- 
tract, the  rates  to  be  charged  by  a  public  service  corporation  (or 
natural  person)  for  a  definite  term,  not  grossly  unreasonable  in 
point  of  time,  and  that  the  effect  of  such  a. contract  is  to  suspend, 
during  the  life  of  the  contract,  the  governmental  power  of  fixing 
and  regulating  the  ratesy  Detroit  v.  Detroit  Citizens'  Street  R. 
Co.,  184  U.  S.  368,  382 ;  Vicksburg  v.  Vicksburg  Waterworks  Co., 
206  U.  S.  496,  508.  (But  for  the  very  reason  that  such  a  contract 
has  the  effect  of  extinguishing  pro  tanto  an  undoubted  power  of 
government,  both  its  existence  and  the  authority  to  make  it  must 
clearly  and  unmistakably  appear,  and  all  dr)ubts  must  be  resolved 
in  favor  of  the  continuance  of  the  power^  Providence  Bank  v. 
Billings,  4  Pet.  514,  561;  Eailroad  Commission  Cases,  116  IJ.  S. 
307,  325;  Vicksburg,  S.  &  P.  R.  Co.  v.  Dennis,  116  U.  S.  665; 
Freeport  Water  Co.  v.  Freeport,  180  U.  S.  587,  599,  611;  Stanis- 
laus County  V.  San  Joaquin  &  K.  River  Canal  &  Irrig.  Co.,  192 


SEC.    III.]  LIMITATIONS    ON    STATE    REGULATION.  263 

U.  S.  201,  211 ;  Metropolitan  Street  R.  Co.  v.  N"ew  York  State  Tax 
Comrs.,  199  TJ.  S.  1.  And  see  Water,  Light,  &  Gas  Co.  v.  Hutchin- 
son, 207  U.  S.  385. 

The  facts  in  this  case  which  seem  to  us  material  upon  the  ques- 
tions of  the  authority  of  the  city  to  contract  for  rates  to  be  main- 
tained during  the  term  of  the  f rancjiise  are  as  follows :  The 
charter  gave  to  the  council  the  power  "  by  ordinance  ...  to  regu- 
late telephone  service  and  the  use  of  telephones  within  the  city, 
.  .  .  and  to  fix  and  determine  tlie  charges  for  telephones  and  tele- 
phone service  and  connection.^  (This  is  an  ample  authority  to  ex- 
ercise the  governmental  power  of  regulating  charges,  but  it  is  no 
authority  tp  enter  into  a  contract  to  abandon  the  governmental 
power  itself. '  It  speaks  in  words  appropriate  to  describe  the  author- 
ity to  exercise  the  governmental  power,  but  entirely  unfitted  to 
describe  the  authority  to  contract.  It  authorizes  command,  but 
not  agreement.  Doubtless,  an  agreement  as  to  rates  might  be 
authorized  by  the  legislature  to  be  made  by  ordinance.  '\But  the 
ordinance  here  described  was  not  an  ordinance  to  agree  upon  the 
charges,  but  an  ordinance  "to  fix  and  determine  the  charges."  It 
authorizes  the  exercise  of  the  governmental  power  and  nothing 
else.  We  find  no  other  provision  in  the  charter  which,  by  any  pos- 
sibility, can  be  held  to  authorize  a  contract  upon  this  important 
and  vital  subject.; 

The  appellant  has  failed  to  show  that  the  city  had  legislative 
authority  to  make  a  contract  of  exemption  from  the  exercise  of 
the  power  of  regulation  conferred  in  the  charter.  It  therefore 
becomes  unnecessary  to  consider  whether  such  a  contract  in  fact 
was  made.  The  appellant's  contention,  that  there  was  a  violation 
of  the  obligation  of  its  contract,  must  therefore  be  denied. 


SOUTHEEN  PACIFIC  CO.  v.   CAMPBELL. 

230  U.  S.  537.     1913.^ 

Mr.  Justice  Hughes  delivered  tlie  opinion  of  the  court. 

It  is  also  urged  that  the  railroad  commission  act  of  Oregon 
(Laws  of  1907,  chap.  53),  and  the  order  in  question,  were  void  as 
against  the  Oregon  &  California  Railroad  Company,  and  the  lessee 
of  its  property,  upon  the  ground  that  the  act  and  order  impaired 
the  obligation  of  the  contract  contained  in  the  charter  of  the  first- 
mentioned  company.  That  company  was  incorporated  in  1870, 
under  the  general  incorporation  act  of  Oregon,  approved  October 

1  The  arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


264  BATES.  [chap.    IV. 

14,  1862,  which,  in  §  34  provided:     "Every  corporation  formed    i 
under  this  act  for  the  construction  of  a  railroad,  as  to  such  road 
shall  he  deemed  common  carriers,  and  shall  have  power  to  collect 
and  receive  such  tolls  or  freight  for  transportation  of  persons  or 
property  thereon  as  it  may  prescribe."*  Reference  is  also  made 
to  the  following  provision  of  the  Constitution  of  Oregon  pursuant 
to  which  this  incorporation  act  was  enacted:   ("Corporations  may 
be  formed  under  general  laws,  but  shall  not  be  created  by  special 
laws  except  for  municipal  purposes.     All  laws  passed  pursuant  to 
this  section  may  be  altered,  amended,  or  repealed  but  not  so  as 
to  alter  or  destroy  any  vested  corporate  rights.")    (Art.  11,  §  2.) 
The  sole  question  presented  on  this  branch  of  the  case,  it  is  said 
by  counsel  for  the  appellants,  "  is  whether  the  judgment  of  the 
carrier  in  fixing  rates  for  transportation  of  persons  or  property 
shall  be  supervised,  regulated,  and  supplanted  by  the  judgment  of 
the  state  exercised  through  a  Railroad  Commission,  or  shall  it  re- 
main as  it  was  at  common  law,  within  the  exclusive  power  and 
jurisdiction  of  the  carrier  to  fix  these  rates,  subject  only  to  the 
power  of  the  courts,  upon  judicial  inquiry,  to  denounce  and  decline 
to  enforce  rates  that  are  excessive  and  unreasonable  ?  " 

As  to  this  question,  it  is  sufficient  to  say  that  it  is  well  established 
that  a  general  charter  provision  such  as  the  one  quoted,  giving 
power  to  charge  and  collect  tolls,  necessarily  implies  that  the 
charges  shall  be  reasonable,  and  does  not  detract  from  the  power 
of  the  state  through  its  legislature,  or  the  agency  lawfully  con- 
stituted thereby,  to  prescribe  reasonable  rates  to  be  observed  by  the 
carrier.  State  v.  Southern  P.  Co.,  23  Or.  424,  432,  433;  Stone  v. 
Farmers'  Loan  &  T.  Co.,  116  U.  S.  307,  330;  Dow  v.  Beidelman, 
125  U.  S.  680,  688 ;  Georgia,  R.  &  Bkg.  Co.  v.  Smith,  128  U.  S. 
174,  181 ;  Chicago,  M.  &  St.  P.  R.  Co.  v.  Minnesota,  134  U.  S.  418, 
455;  Covington  &  C.  Bridge  Co.  v.  Kentucky,  154  U.  S.  204,  215; 
Louisville  &  N.  R.  Co.  v.  Kentucky,  161  U.  S.  677,  696;  Owens- 
horo  V.  Owensboro  Waterworks  Co.,  191  U.  S.  358,  370.  In  the 
case  of  Stone  v.  Farmers'  Loan  &  T.  Co.,  sup-a,  where  the  charter 
empowered  the  railroad  company  "  from  time  to  time  to  fix,  regu- 
late, and  receive  the  toll  and  charges  by  them  to  be  received  for 
transportation  of  persons  or  property  on  their  railroad,"  and  it 
was  insisted  that  a  subsequent  statute  creating  a  railroad  commis- 
sion with  authority  to  fix  maximum  rates  was  an  impairment 
of  contract  obligation,  the  court  said :  "  The  claim  now  is  that  by 
§  12"  (the  provision  referred  to)  "the  state  has  surrendered  the 
power  to  fix  a  maximum  for  this  company,  and  has  declared  that  the 
courts  shall  be  left  to  determine  what  is  reasonable,  free  of  all  legis- 
lative control.     We  see  no  evidence  of  such  intention.     Power  is 


SEC.    IV.]  OPERATING    EXPENSES    AND    MAINTENANCE.  265 

granted  to  fix  reasonable  charges,  but  what  shall  be  deemed  reason- 
able in  law  is  nowhere  indicated.  .  .  .  Consequently,  all  the  power 
which  the  state  had  in  the  matter  before  the  charter  it  retained  after- 
wards. The  power  to  charge  being  coupled  with  the  condition  that 
the  charge  shall  be  reasonable,  the  state  is  left  free  to  act  on  the 
subject  of  reasonableness,  within  the  limits  of  its  general  authority, 
as  circumstances  may  require.  The  right  to  fix  reasonable  charged 
has  been  granted,  but  the  power  of  declaring  what  shall  be  deemed 
reasonable  has  not  been  surrendered." 


Section  4. 
Operating  Expenses  and  Maintenance. 

CHICAGO,  MILWAUKEE  AND  ST.   PAUL  RAILWAY  CO. 

V.  TOMPKINS. 

176  U.  S.  167.     1900.^ 

Mr.  Justice  Brewer  delivered  the  opinion  of  the  court. 

Few  cases  are  more  difficult  or  perplexing  than  those  which 
involve  an  inquiry  whether  the  rates  prescribed  by  a  state  legisla- 
ture for  the  carriage  of  passengers  and  freight  are  unreasonable. 
And  yet  this  difficulty  afi^ords  no  excuse  for  a  failure  to  examine 
and  solve  the  question  involved.  It  has  often  been  said  that  this 
is  a  government  of  laws,  and  not  of  men;  and  by  this  court,  in 
Yick  Wo  V.  Hopkins,  118  U.  S.  356,  369:  "When  we  consider 
the  nature  and  the  theory  of  our  institutions  of  government,  the 
principles  upon  which  they  are  supposed  to  rest,  and  review  the 
history  of  their  development,  we  are  constrained  to  conclude  that 
they  do  not  mean  to  leave  room  for  the  play  and  action  of  purely 
personal  and  arbitrary  power." 

When  we  recall  that,  as  estimated,  over  ten  thousand  millions 
of  dollars  are  invested  in  railroad  property,  the  proposition  that 
such  a  vast  amount  of  property  is  beyond  the  protecting  clauses  of 
the  Constitution,  that  the  owners  may  be  deprived  of  it  by  the  ar- 
bitrary enactment  of  any  legislature,  state,  or  nation,  without  any 
right  of  appeal  to  the  courts,  is  one  which  cannot  for  a  moment 
be  tolerated.  Difficult  as  are  the  questions  involved  in  these  cases, 
burdensome-  as  -the  labor  is  which  they  cast  upon  the  courts,  no 
tribunal  can  hesitate  to  respond  to  the  duty  of  inquiry  and  pro- 
tection cast  upon  it  by  the   Constitution.     Eailroad   Commission 

1  The  statement  of  facts  and  part  of  the  opinion  are  omitted. —  Ed. 


266  BATES.  [chap.  IV. 

Cases,  116  U.  S.  307;  Dow  v.  Beidelman,  125  TJ.  S.  680;  Georgia 
E.  &  Bkg.  Co.  V.  Smith,  128  U.  S.  174;  Chicago,  M.  &  St.  P.  R. 
Co.  V.  Minnesota,  134  U.  S.  418;  Chicago  &  G.  T.  R.  Co.  v. 
Wellman,  143  U.  S.  339;  Eeagan  v.  Farmers'  Loan  &  T.  Co.,  154 
U.  S.  362  ;  St.  Louis  &  S.  F.  R.  Co.  v.  Gill,  156  U.  S.  649 ;  Covington 
&  L.  Turnp.  Road  Co.  v.  Sandford,  164  U.  S.  578;  Smyth  v.  Ames,  _ 
169  U.  S.  466. 

It  is  often  said  that  the  legislature  is  presumed  to  act  with  full 
knowledge  of  the  facts  upon  which  its  legislation  is  based.     This 
is  undoubtedly  true,  but  when  it  is  assumed  from  that,  that  its 
judgment  upon  those  facts  is  not  subject  to  investigation,  the  in- 
ference is  carried  too  far.     Doubtless  upon  mere  questions  of  policy 
its  conclusions  are  beyond  judicial  consideration.     Courts  may  not 
inquire  whether  any  given  act  is  wise  or  unwise,  and  only  when 
such  act  trespasses  upon  vested  rights  may  the  courts  intervene. 
,  A  single  illustration  will  make  this  clear :     It  is  within  the  com-  ' 
Ipetency  of  the  legislature  to  determine  when  and  what  property 
/  shall  be  taken  for  public  uses.     That  question  is  one  of  policy  over 
(  which  the  courts  have  no  supervision;  but  if  after  determining  that 
certain  property  shall  be  taken  for  public  uses  the  legislature  pro- 
ceeds further,  and  declares  that  only  a  certain  price  shall  be  paid 
for  it,  then  the  owner  may "  challenge  the  validity  of  that  part  of 
the  act,  may  contend  that  his  property  is  taken  without  due  com- 
pensation;  and  the  legislative   determination   of   value   does   not 
preclude  an  investigation  in  the  proper  judicial  tribunals.     The 
same  principle  applies  when  vested  rights  of  property  are  disturbed 
by  a  legislative  enactment  in  respect  to  rates. 

In  approaching  the  consideration  of  a  case  of  this  kind  we  start 
with  the  presumption  that  the  act  of  the  legislature  is  valid,  and 
upon  any  company  seeking  to  challenge  its  validity  rests  the  bur- 
den of  proving  that  it  infringes  the  constitutional  guaranty  of  pro- 
tection to  property.  The  case  must  be  a  clear  one  in  behalf  of 
the  railroad  company  or  the  legislation  of  the  state  must  be  upheld. 

Such  being  unquestionably  the  law,  it  is  obviously  of  the  utmost 
importance  that  the  facts  shall  be  clearly  and  accurately  found  and 
distinctly  stated  by  the  trial  court,  and  that  those  facts  shall  sus- 
tain the  conclusion  reached. 

We  are  of  opinion  that  neither  the  findings  made  by  the  court, 
nor  such  facts  as  are  stated  in  its  opinion,  are  sufficient  to  war- 
rant a  conclusion  upon  the  question  whether  the  rates  prescribed  by 
the  defendants  were  unreasonable  or  not,  and  we  are  also  of  opin- 
ion that  the  process  by  which  tlie  court  came  to  its  conclusion  is  not 
one  which  can  be  relied  upon.  The  court  proceeded  upon  the 
theory  that  a  comparison  of  the  actual  gross  receipts  of  the  com- 


SEC.    IV.]  OPERATING    EXPENSES    AND    MAINTENANCE.  267 

pany  from  its  South  Dakota  local  business  with  those  which  it 
would  have  received  if  the  rates  prescribed  b}"-  the  defendants  had 
been  in  force  was  sufficient  to  determine  the  question  of  the  rea- 
sonableness of  these  latter  rates,  and  instituted  such  comparison 
with  respect  to  the  four  years  preceding  the  commencement  of  this 
suit.  Now,  it  is  obvious  that  the  amount  of  gross  receipts  from 
any  business  does  not  of  itself  determine  whether  such  business  is 
profitable  or  not.  The  question  of  expenses  incurred  in  producing 
those  receipts  must  be  always  taken  into  account,  and  only  by 
striking  the  balance  between  the  two  can  it  be  determined  that  the 
business  is  profitable.  The  gross  receipts  may  be  large,  but  if  the 
expenses  are  larger  surely  the  business  is  not  profitable.  It  can- 
not be  said  that  the  rates  which  a  legislature  prescribes  are  rea- 
sonable if  the  railroad  company  charging  only  those  rates  finds  the 
necessary  expenses  of  carrying  on  its  business  greater  than  its  re- 
ceipts. 

But  here  we  are  confronted  by  the  ninth  statement  in  the  find- 
ings of  fact,  to  wit,  "  that  the  court  is  unable  to  find  from  the  tes- 
timony what  the  actual  cost  of  earning  the  local  earnings  for  the 
fiscal  years  ending  June  30,  1894,  1895,  1896,  and  1897  was." 
If  the  court  meant  by  that  to  say  that  there  was  no  testimony 
tending  to  show  what  was  the  cost  of  doing  local  business,  we  are 
constrained  to  say  that  the  statement  is  erroneous,  because  there 
was  abundance  of  testimony  bearing  upon  that  question.  If  it 
meant  simply  that  it  could  not  determine  that  fact  with  mathemati- 
cal accuracy,  basing  it  upon  testimony  of  the  exact  amount  of 
money  paid  out  for  doing  such  work,  it  is  undoubtedly  true,  but 
there  are  many  things  that  have  to  be  determined  by  court  and 
jury  in  respect  to  which  mathematical  accuracy  is  not  possible. 
Take  the  ordinary  case  of  condemnation  of  real  estate,  the  value  is 
to  be  determined  by  the  trial  tribunal,  whether  jury  or  court,  and 
yet  no  one  is  able  to  state  the  exact  value.  In  this  very  case  the 
court  fixed  the  value  of  the  company's  property  in  South  Dakota 
at  $10,000,000,  and  yet  it  is  impossible  from  the  testimony  to  say 
that  this  conclusion  was  absolutely  accurate,  that  there  was  testi- 
mony tending  to  show  to  a  dollar  such  value.  Beyond  the  figures 
given  from  the  books  of  the  company  of  the  actual  cost  of  doing 
the  total  business  of  the  company  there  was  the  testimony  of  sev- 
eral experts  as  to  the  relative  cost  of  doing  local  and  through  busi- 
ness. Such  testimony  is  not  to  be  disregarded  simply  because  it 
cannot  demonstrate  by  figures  the  exact  amount  or  per  cent  of  the 
extra  cost.  It  is  obvious  on  a  little  reflection  that  the  cost  of 
moving  local  freight  is  greater  than  that  of  moving  through  freight, 
and  equally  obvious  that  it  is  almost  if  not  quite  impossible  to  de- 


268  RATES.  [chap.  IV. 

termine  the  difference  with  mathematical  accuracy.  Take  a  single 
line  of  100  miles,  with  ten  stations.  One  train  starts  from  one 
terminus  with  through  freight  and  goes  to  the  other  without  stop. 
A  second  train  starts  with  freight  for  each  intermediate  station. 
The  mileage  is  the  same.  The  amount  of  freight  hauled  per  mile 
may  be  the  same,  but  the  time  taken  by  the  one  is  greater  than 
that  taken  by  the  other.  Additional  fuel  is  consumed  at  each 
station  where  there  is  a  stop.  The  wear  and  tear  of  the  locomo- 
tive and  cars  from  the  increased  stops  and  in  shifting  cars  from 
main  to  side  tracks  is  greater ;  there  are  the  wages  of  the  employees 
at  the  intermediate  stations,  the  cost  of  insurance,  and  these  ele- 
ments are  so  varying  and  uncertain  that  it  would  seem  quite  out 
of  reach  to  make  any  accurate  comparison  of  the  relative  cost. 
And  if  this  is  true  when  there  are  two  separate  trains,  it  is  more 
so  when  the  same  train  carries  both  local  and  through  freight.  It 
is  impossible  to  distribute  between  the  two  the  relative  cost  of 
carriage.  Yet  that  there  is  a  difference  is  manifest,  and  upon  such 
difference  the  opinions  of  experts  familiar  with  railroad  business 
is  competent  testimony,  and  cannot  be  disregarded. 

We  think,  therefore,  there  was  error  in  the  failure  to  find  the 
cost  of  doing  the  local  business,  and  that  only  by  a  comparison 
between  the  gross  receipts  and  the  cost  of  doing  the  business,  ascer- 
taining thus  the  net  earnings,  can  the  true  effect  of  the  reduction 
of  rates  be  determined. 


CHICAGO  AND  GRAND  TEUNK  EAILWAY  CO.  v. 
WELLMAN. 

143  U.  S.  339.     1892.^ 

In  1889  the  legislature  of  the  state  of  Michigan  passed  an  act, 
No.  203  of  the  Public  Acts  of  that  year,  pages  282  and  283,  by 
which,  among  other  things,  section  3323  of  Howell's  Statutes,  be- 
ing a  part  of  the  railroad  law  of  that  state,  was  amended,  reducing 
the  rate  for  passenger  service  on  defendant's  line.  Plaintiff 
tendered  fare  according  to  the  statute,  and  being  refused  carriage 
brought  this  action,  which  was  tried  on  an  agreed  statement  of 
facts.  Defendant  contended  that  the  statute  was  unconstitutional. 
Judgment  was  rendered  for  plaintiff,  and  affirmed  upon  appeal  by 
the  Supreme  Court  of  the  State. 

Mr.  Justice  Brewer  delivered  the  opinion  of  the  court. 

On  the  very  day  the  act  went  into  force  the  application  for  a 

1  The  statement  of  facts  is  condensed,  and  part  of  the  opinion  is  omitted. 

—  Ed. 


SEC.    IV.]  OPEEATIXG   EXPENSES    AND   MAINTENANCE.  2G9 

ticket  is  made,  a  suit  commenced,  and  within  two  months  a  judg- 
ment obtained  in  the  trial  court;  a  judgment  rendered,  not  upon 
the  presentation  of  all  the  facts  from  the  lips  of  witnesses,  and  a 
full  inquiry  into  them,  but  upon  an  agreed  statement  which  pre- 
cludes inquiry  into  many  things  which  necessarily  largely  enter 
into  the  determination  of  the  matter  in  controversy.  A  single 
suggestion  in  this  direction :  It  is  agreed  that  the  defendant's 
operating  expenses  for  1888  were  $2,404,516.54.  Of  what  do  these 
operating  expenses  consist?  Are  they  made  up  partially  of  ex- 
travagant salaries, —  fifty  to  one  hundred  thousand  dollars  to  the 
president,  and  in  like  proportions  to  subordinate  officers?  Surely, 
before  the  courts  are  called  upon  to  adjudge  an  act  of  the  legisla- 
ture fixing  the  maximum  passenger  rates  for  railroad  companies 
to  be  unconstitutional,  on  the  ground  that  its  enforcement  would 
prevent  the  stockholders  from  receiving  any  dividends  on  their  in- 
vestments, or  the  bondliolders  any  interest  on  their  loans,  they 
should  be  fully  advised  as  to  what  is  done  with  the  receipts  and 
earnings  of  the  company;  for,  if  so  advised,  it  might  clearly  ap- 
pear that  a  prudent  and  honest  management  would,  within  the 
rates  prescribed,  secure  to  the  bondholders  their  interest,  and  to  the 
stockholders  reasonable  dividends.  While  the  protection  of  vested 
rights  of  property  is  a  supreme  duty  of  the  courts,  it  has  not  come 
to  this,  that  the  legislative  power  rests  subservient  to  the  discre- 
tion of  any  railroad  corporation  which  may,  by  exorbitant  and  un- 
reasonable salaries,  or  in  some  other  improper  way,  transfer  its 
earnings  into  what  it  is  pleased  to  call  "  operating  expenses." 

We  do  not  mean  to  insinuate  aught  against  the  actual  manage- 
ment of  the  affairs  of  this  company.  The  silence  of  the  record 
gives  us  no  information,  and  we  have  no  knowledge  outside  thereof, 
and  no  suspicion  of  wrong.  Our  suggestion  is  only  to  indicate 
how  easily  courts  may  be  misled  into  doing  grievous  wrong  to  the 
public,  and  how  careful  they  should  be  to  not  declare  legislative 
acts  unconstitutional  upon  agreed  and  general  statements,  and 
without  the  fullest  disclosure  of  all  material  facts.  Judgment 
affirmed. 


In  re  ARKANSAS  RATE  CASES. 
187  Fed.  290.     1911.^ 

Trieber,  District  Judge.  Personal  Injuries.  It  is  also  claimed 
that  complainants  are  not  entitled  to  "  charge  in  the  expense  of 
operation  the  sums  they  paid  for  injuries  to  persons."     This  claim 

1  Only  an  extract  from  the  voluminous  opinion  is  here  reprinted. —  Ed. 


270  KATES.  [chap.    IV. 

cannot  be  treated  seriously.  It  is  true,  as  claimed  by  counsel,  "  that 
the  people  of  Arkansas  are  not  insurers  of  the  risks  of  the  railroad 
business ; "  but,  on  the  other  hand,  such  accidents  cannot  be  wholly 
avoided,  and,  as  there  is  no  pretense  that  they  were  willful  or  in- 
tentional on  the  part  of  the  officials  of  the  company,  they  must  be 
considered  as  unavoidable  risks  of  operation  of  the  business.  Many 
persons  and  corporations  engaged  in  industrial  pursuits  of  a  char- 
acter dangerous  to  employes  or  others  insure  themselves  against 
such  loss,  and  the  premiums  paid  therefor  are  charged  to  expense 
of  operation.  Eailroads,  or  rather  these  roads,  for  reasons  which 
are  not  explained  by  the  evidence  in  these  cases,  but  probably 
economic,  carry  their  own  insurance  against  such  losses,  and  charge 
them  as  expense  of  operation,  as  they  would  otherwise  charge  the 
premiums  paid  for  the  insurance,  if  they  obtained  it  from  insur- 
ance companies.  As  these  indemnity  insurance  companies  make 
the  charge  high  enough  to  cover  the  expense  of  the  management 
of  their  business  and  a  profit  on  their  investment,  the  policy  of  the 
railroad  companies  is  probably  most  economical. 


PANNELL  V.  LOUISVILLE  TOBACCO  WAKEHOUSE   CO. 

113  Ky.  630.     1902.^ 

HoBSON,  J.  In  the  year  1900  the  appellants  instituted  a  number 
of  suits  at  law  to  recover  penalties  for  the  violation  of  sections 
4799,  4801,  4803,  Ky.  St.  Section  4799  provides  that  a  ware- 
houseman, in  settling  with  a  shipper,  shall  account  to  him  for  the 
net  weight  of  the  tobacco  sold,  including  the  sample;  section 
4801,  that  the  warehouseman,  in  selling  leaf  tobacco  at  public 
auction,  shall  receive  as  compensation  therefor  $3  a  hogshead 
from  the  owner  or  his  agent ;  section  4803,  that  it  shall  be  unlaw- 
ful for  the  warehouseman  directly  or  indirectly  to  charge  the  seller 
or  owner  anything  by  way  of  commission  or  otherwise  for  paying 
to  him  the  money  for  which  his  tobacco  is  sold.  Section  4807 
makes  the  warehouseman  liable  to  the  party  aggrieved  in  the  sura 
of  not  less  than  $25  nor  more  than  $100  for  a  violation  of  these 
provisions.  Appellees  are  warehousemen  in  Louisville,  Ky.,  and 
appellants  are  sellers  of  tobacco.  The  actions  instituted  by  ap- 
pellants sought  to  recover  penalties  for  violation  of  the  foregoing 
sections  by  the  warehousemen  in  not  accounting  to  the  shipper  for 
the  full  weight  of  his  tobacco,  and  in  charging  him  commission 
on  the  price  in  addition  to  the  $2  a  hogshead  for  selling  it. 

1  Part  of  the  statement  of  facts  is  omitted,  and  only  one  point  is  reprinted 
from  the  opinion. —  Ed. 


SEC.    IV.]  OPEKATIXG   EXPENSES    AND    MAINTENANCE.  271 

About  175,000  hogsheads  are  sold  annually  by  appellees.  But 
a  short  time  is  taken  to  sell  a  hogshead,  and  it  is  hard  to  escape 
the  conviction,  from  the  proof,  that  there  is  a  very  bitter  rivalry 
between  them  to  secure  trade,  and  that  this  rivalry  is  somewhat 
promoted  by  the  scale  of  fees  that  are  charged  under  the  rules. 
In  other  words,  the  rules  allow  a  liberal  compensation,  and  it  is 
a  matter  of  importance  to  the  warehouse  to  secure  the  trade  of  a 
customer,  and  in  order  to  secure  trade  the  houses  expend  large 
amounts  in  the  country.  If  the  business  was  not  so  remunerative, 
they  could  not  afford  to  expend  as  much  as  is  shown  by  the  proof 
in  securing  it,  and  we  do  not  think  it  can  be  maintained  that  a 
scale  of  fees  which  is  so  large  as  to  justify  the  warehouseman  in 
expending  large  amounts  to  secure  trade  might  not  be  properly 
reduced.  For  we  know  that  the  larger  the  fee,  the  more  the  ware- 
housemen can  afford  to  pay  out  to  get  the  trade;  and  it  is  not 
the  policy  of  the  law  that  the  warehouseman  should  be  allowed  to 
charge  a  large  fee  against  the  shipper,  in  order  that  he  may  be 
able  to  spend  a  portion  of  it  in  securing  the  trade.  To  illustrate : 
If  the  fees  were  so  large  that  the  warehousemen  could  give  half  of 
them  to  get  the  business,  it  is  manifest  that  this  would  lead  to 
practices  that  ought  not  to  be  encouraged,  and  would  be  a  hardship 
on  the  tobacco  raiser,  which  the  statute  was  designed  to  prevent. 
Of  course,  the  proof  before  us  does  not  show  such  an  extreme  case 
as  this.  But  the  facts  shown  by  tlie  evidence  do  not  present  a 
ease  showing  clearly  and  beyond  all  doubt  such  a  flagrant  attack 
upon  the  rights  of  property  as  to  compel  the  court  to  say  that  the 
rate  prescribed  will  necessarily  have  the  effect  to  deny  just  com- 
pensation for  private  property  taken  for  public  use.^ 


BEYMEE  V.  BUTLEE  WATEE  CO. 

179  Pa.  St.  231.     1897.^ 

Mr.  Justice  Williams.  This  leads  us  to  the  second  question 
raised,  viz. :  By  what  rule  is  the  court  to  determine  what  is  rea- 
sonable, and  what  is  oppressive?  Ordinarily,  that  is  a  reasonable 
charge  or  system  of  charges  which  yields  a  fair  return  upon  the 
investment.  Fixed  charges  and  the  costs  of  maintenance  and 
operation  must  first  be  provided  for.  Then  the  interests  of  the 
owners  of  the  property  are  to  be  considered.  They  are  entitled  to 
a  rate  of  return,  if  their  property  will  earn  it,  not  less  than  the 

2  Compare  on  this  point  In  re  Arkansas  Rate  Cases  (1911),  187  Fed.  290, 
at  p.  316. 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


272  BATES.  [chap.   IV. 

legal  rate  of  interest ;  and  a  system  of  charges  that  yields  no  more 
income  than  is  fairly  required  to  maintain  the  plant,  pay  fixed 
charges  and  operating  expenses,  provide  a  suitable  sinking  fund 
for  the  payment  of  debts,  and  pay  a  fair  profit  to  the  owners  of 
the  property,  cannot  be  said  to  be  unreasonable.  This  whole  sub- 
ject was  brought  to  the  attention  of  the  learned  judge  by  a  request 
that  he  should  find,  as  matter  of  law,  that  the  reasonableness  of 
the  charges  must  be  determined  with  reference  to  the  expenditure 
in  obtaining  the  supply,  and  providing  for  a  fund  to  maintain 
the  plant  in  good  order,  and  pay  a  fair  profit  upon  the  money  in- 
vested by  the  owners,  and  that  a  rate  which  did  no  more  than 
this  was  neither  excessive  nor  unjust.  This  the  learned  judge  re- 
fused to  find,  saying,  in  reply  to  the  request:  "We  have  no 
authority  for  such  a  ruling,  and  it  would  be  unjust  to  the  consumer, 
who  would  have  to  pay  full  cost  of  the  water,  provide  a  sinking 
fund,  secure  a  reasonable  profit  upon  the  investment,  and  have 
no  voice  in  the  management  of  the  business  of  the  company.  The 
act  of  assembly  in  this  regard  can  bear  no  such  construction." 

This  ruling  cannot  be  sustained.  vThe  cost  of  the  water  to  the 
company  includes  a  fair  return  to  the  persons  who  furnished  the 
capital  for  the  construction  of  the  plant,  in  addition  to  an  allow- 
ance annually  of  a  sum  sufficient  to  keep  the  plant  in  good  repair, 
and  to  pay  any  fixed  charges  and  operating  expenses.  A  rate  of 
water  rents  that  enables  the  company  to  realize  no  more  than  this 
is  reasonable  and  just. 


CHICAGO  AND  NORTHWESTERN  EAILW AY  CO.  v.  DEY. 

35  Fed.  866.     1888.^ 

Brewer,  J.  The  fixed  charges  are  the  interest  on  the  bonds. 
This  must  be  paid,  for  otherwise  foreclosure  would  follow,  and  the 
interest  of  the  mortgagor  swept  out  of  existence.  The  property 
of  the  stockholders  cannot  be  destroyed  any  more  than  the  property 
of  the  bondholders.  Each  has  a  fixed  and  vested  interest,  which 
cannot  be  taken  away.  I  know  that  often  the  stockholder  and  the 
bondholder  are  regarded  and  spoken  of  as  having  but  a  single  in- 
terest; but  the  law  recognizes  a  clear  distinction.  A  mortgage  on 
a  railroad  creates  the  same  rights  in  mortgagor  and  mortgagee  as 
a  mortgage  on  my  homestead.  The  legislature  cannot  destroy  my 
property  in  my  homestead  simply  because  it  is  mortgaged,  neither 
can  it  destroy  the  stockholders'  property  because  the  railroad  is 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


273 


SEC.    IV.]  OPERATING    EXPENSES    AND   MAINTENANCE. 

mortgaged.  It  cannot  interfere  with  a  contract  between  the  com- 
pany mortgagor  and  the  mortgagee,  or  reduce  the  stipulated  rate 
of  interest;  and  so,  unless  that  stipulated  interest  is  paid,  fore- 
closure of  course  follows,  and  the  mortgagors'  rights,  the  property 
of  the  stockholders,  are  swept  away.  Whatever  individuals  may 
do  by  private  contract  to  modify  existing  rates  of  interest,  the 
legislature  has  no  compulsory  power  in  the  matter.  While,  by  re- 
ducing the  rates,  the  value  of  the  stockholders'  property  may  be 
reduced,  in  that  less  dividends  are  possible,—  and  that  power  of  the 
legislature  over  property  is  conceded, —  yet,  if  the  rates  are  so  re- 
duced that  no  dividends  are  possible,  and  especially  if  they  are  such 
that  the  interest  on  the  mortgage  debt  is  not  earned,  then  the  en- 
forcement of  the  rates  means  either  confiscation,  or  compelling,  in 
the  language  of  the  supreme  court,  the  corporation  to  carry  persons 
or  property  without  reward." 


LONG  BEANCH  COMMISSION  v.  TINTERN  MANOR 
W^ATER  CO. 

70  N.  J.  Eq.  71.     1905.^ 

Pitney,  V.  C.  I  have  intimated  that  the  defendant  ought  not 
to  expect,  at  the  start,  a  compensatory  income  such  as  that  stated 
by  Judge  Williams  in  the  Supreme  Court  of  Pennsylvania,  and  by 
the  Supreme  Court  of  Maine,  above  cited,  but  I  do  think  they  ought 
to  get  at  the  start  a  moderate  rate  of  interest,  say  5  per  cent,  on 
their  investment  after  paying  all  expenses  of  operation  and  main- 
tenance and  a  moderate  allowance  for  depreciation  in  value. 

This  latter  item  as  applied  to  the  water  mains  is  slight. 

If  originally  laid  of  iron  of  proper  quality  and  properly  coated 
on  the  interior,  they  are  practically  immortal.  They  are,  however, 
liable  to  diminution  in  carrying  capacity,  due  to  the  growth  on  the 
interior  of  tubercles  of  rust.  This  is  an  unascertainahle  quantity, 
which  varies  materially  with  the  quality  of  the  iron,  the  character 
of  the  coating,  and  the  characteristics  of  the  water. 

The  fire  hydrants,  steam  pumps,  boilers  and  filters,  and  buildings 
certainly  do "  depreciate  in  value  each  year  to  an  appreciable  extent 
over  and  above  the  amount  which  may  be  expended  upon  them  for 
reasonable  and  ordinary  repairs.  Mr.  La  Monte  put  this  deprecia- 
tion at  5  per  cent,  on  all  the  mains  and  hydrants.     I  think  that  too 

2  See  Chicago,  M.  &  St.  P.  Ry.  Co.  «•  Smith  (1901)    110  Fed   473 
Compare  Minneapolis  &  St.  L.  R.  R.  Co.  i;.  Minnesota   (1902)    18G  U.  b. 
257,  2GG;  San  Diego  L.  &  T.  Co.  v.  National  City  (1896),  (4  Fed.  (9,  87. 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


374  EATES.  [chap.  IV. 

great,  and  fix  it  at  1  per  cent,  on  so  much  of  the  $847,000  as  is 
represented  by  the  material  so  subject  to  depreciation.  Just  what 
proportion  of  the  whole  that  represents  must  be  a  mere  estimate; 
with  insufficient  data  I  put  it  at  $600,000. 

It  follows  that  the  net  income  which  the  defendant  ought  to  re- 
ceive at  the  start  from  Long  Branch  should  be  5  per  cent,  on  $847,- 
000,  which  amounts  to  $42,350,  and  1  per  cent,  on  $600,000,  mak- 
ing $6,000,  and  a  total  of  $48,350. 

To  this  must  be  added  the  costs  of  maintenance  and  administra- 
tion including  ordinary  repairs  and  taxes.  Mr.  La  Monte  had  made 
up  and  submitted  and  been  cross-examined  upon  a  very  careful 
estimate  of  those  items  showing  the  amount  to  be  $30,000.  I  have 
carefully  scrutinized  it  and  believe  it  to  be  a  fair  and  just  estimate. 

Allotting  two-thirds  of  this  to  Long  Branch,  we  have  it  charged 
with  $20,000  a  year. 

Tliis  seems  a  large  sum,  but  it  must  be  borne  in  mind  that  the 
works  must  in  their  size  and  operation  be  gauged  to  the  highest 
population  in  the  crowded  season,  and  to  the  extravagant  use  in 
which  Long  Branch  indulges  for  street  sprinkling.  Taking  those 
matters  into  consideration,  I  do  not  find  it  oppressive.^ 


CEDAE  EAPIDS  GAS  LIGHT  CO.  v.  THE  CITY  OF  CEDAR 

EAPIDS. 

144  Iowa,  426.     1909> 

Ladd,  J.  It  appears  that  the  company  had  charged  off  its  books 
as  depreciation  in  the  value  of  its  property  due  to  use  the  following 
sums:  $10,000  in  1902,  $20,000  in  1903,  $12,000  in  1904,  $10,- 
000  in  1905,  $13,000  in  1906.  In  computing  the  expense  of  dis- 
tribution, the  plaintiff's  accountant,  as  said,  included  these  items, 
while  the  defendant's  accountant  allowed  for  depreciation  of  prop- 
erty $.05  per  1,000  cubic  feet  of  gas  manufactured.  This  would 
make  a  difference  in  manufacturing  and  distributing  gas  sold  in 
1905  of  $.0714  per  1,000  cubic  feet,  and  in  1906  of  $.0816.  There 
can  be  no  doubt  as  to  the  justice  of  some  allowance  for  deprecia- 
tion.    A  public  service  corporation  is  under  no  obligation  to  sac- 

2  "  The  conditions  in  no  two  cities  may  be  alike,  and  it  seems  reasonable 
to  say  that  quostions  as  to  telephone  rates  may  in  large  measure  be  local 
questions  to  be  determined  upon  factors,  among  which  the  most  important 
may  be  (1)  the  cost  of  the  plant;  (2)  the  cost  of  operation  and  mainte- 
nance; (3)  the  amount  of  taxes  and  other  dues  exacted  by  the  local  gov- 
ernment- and  (4)  the  rapidity  of  deterioration  due  to  climatic  or  other 
causes."     Cumberland  T.  &  T.  "Co.  v.  Memphis   (1908),  183  Fed.  875,  877. 

1  Only  one  point  from  tlie  opinion  is  here  reprinted.- —  Ed. 


SEC.    IV.]  OPERATING    EXPENSES    AND    MAINTENANCE.  275 

rifice  its  property  for  the  public  good.  Nor  is  it  bound  to  see  its 
property  gradually  wasted  by  wear  and  decay  without  making  pro- 
vision for  its  replacement.  It  is  entitled  to  earn  enough  not  only 
to  meet  the  expenses  of  current  repairs,  but  also  to  provide  means 
for  replacing  the  parts  of  the  plant  when  these  can  no  longer  be 
used.  "  It  is  entitled  to  see  that  from  its  earnings  the  value  of  the 
property  is  kept  unimpaired,  so  that  at  the  end  of  any  given  term 
of  years  the  original  investment  shall  remain  as  it  was  at  the  be- 
ginning. It  is  not  only  the  right  of  the  company  to  make  such 
provision,  but  it  is  its  duty  to  its  bond  and  stock  holders  and,  in 
the  case  of  a  public  service  corporation  at  least,  its  plain  duty  to 
the  public.  If  a  different  course  were  pursued,  the  only  method 
of  providing  for  displacement  of  property  which  has  ceased  to  be 
useful  would  be  the  investment  of  new  capital  and  the  issue  of  new 
bonds  or  stock.  This  course  would  lead  to  a  constantly  increasing 
variance  between  present  value  and  bond  and  stock  capitalization 
—  a  tendency  which  would  inevitably  lead  to  disaster  either  to  the 
stockholders  or  to  the  public,  or  both."  This  situation  ought  not 
to  be  brought  about  either  by  the  payment  of  excessive  dividends 
or  the  omission  to  exact  proper  prices  for  the  output.  Mayor,  etc., 
of  Knoxville  v.  Knoxville  Water  Co.,  29  Sup.  Ct.  148. 

There  is  a  wide  divergence  of  opinion  as  to  the  amount  that 
should  be  set  aside  for  depreciation,  but  all  the  witnesses  concede 
that  their  estimates  are  without  data  as  a  foundation,  though  the 
elements  to  be  taken  into  account  are  enumerated.  As  contended, 
scarcely  two  parts  of  the  plant  will  cease  to  be  useful  at  the  same 
time.  Some  will  last  but  a  brief  period,  while  others  may  be  serv- 
ing their  purposes  for  more  than  a  century  to  come.  Some  stress 
is  put  on  the  possibility  of  enlargement  and  of  the  necessity  of  re- 
placing parts  with  others  adequate  to  meet  increased  demands,  but 
there  is  no  reason  to  think  that  the  income  will  not  keep  pace  with 
the  extensions  or  enlargements.  In  other  words,  profits  on  the  ad- 
ditional sales  of  gas  will  in  all  probability  yield  an  adequate  in- 
come on  the  amounts  expended  for  the  expansion  of  the  plant. 
Should  replacement  of  some  of  the  machinery  now  in  use  prove 
necessary  because  of  new  inventions,  this  in  all  probability  will  be 
owing  to  the  economy  which  may  be  effected  thereby  in  produc- 
tion, and  again  the  saving  may  be  expected  to  yield  a  fair  return 
for  the  new  investment.  Moreover,  the  rate  fixed  by  this  ordinance 
is  not  necessarily  perpetual,  but  subject  to  such  changes  by  the  gov- 
erning board  of  the  city  as  shall  be  essential  to  meet  the  contingen- 
cies of  the  future.  The  expert  accountant  who  testified  in  behalf 
of  defendant  allowed  5  cents  per  1,000  cubic  feet  of  gas  manu- 
factured for  depreciation,  and  another,  who  had  made  a  study  of 


276  EATES.  [chap.    IV. 

the  durability  of  uifferent  material,  testified  that  if  1.7  per  cent, 
of  the  value  of  the  plant  were  put  into  a  sinking  fund  drawing 
annual  interest  at  4  per  cent,  per  annum,  this  would  produce  enough 
to  replace  the  plant  in  30  years.  The  amount  allowed  by  the  ac- 
countant approximates  this  percentage  of  the  value,  and  we  are  of 
opinion  that  in  view  of  the  evidence  adduced  it  will  prove  adequate 
for  replacement  of  the  different  portions  of  the  plant  when  this 
shall  become  necessary.  Appellee  insists  that  the  average  cost  dur- 
ing the  past  five  years  should  be  adopted.  This,  including  depreci- 
ation, would  be  $.6404  per  1,000  feet.  Another  item  is  not  to  be 
overlooked,  and  that  is  the  probability  that  in  the  future  the  com- 
pany, in  view  of  this  investigation,  will  be  required  to  pay  its  just 
portion  of  the  burdens  of  taxation.  What  the  increase  shall  be 
cannot  be  told  in  advance,  but  it  is  likely  to  be  enough  to  offset  any 
decrease  in  the  cost  of  fittings.  The  cost  of  gas  production  during 
the  years  1905  and  1906  was  much  higher  than  for  the  years  previ- 
ous. This  was  not  owing  to  the  increased  cost  of  fuel.  The  ac- 
countant of  defendants  testified  that  the  cost  of  manufacturing  and 
distribution,  including  allowance  for  depreciation,  was  $.57  per 
1,000  cubic  feet  in  1902,  $.5935  in  1903,  $.6375  in  1904.  This  in- 
crease in  cost  was  due  in  large  part  to  the  incjease  in  the  fittings 
account,  such  as  installing  stoves,  meters,  and  the  like.  In  1902 
there  was  a  profit  in  this  account  of  $283.99,  in  1903,  an  expense 
of  $972.80,  in  1904  an  expense  of  $39.60,  in  1905  of  $6,758.89, 
and  in  1906  of  $5,943.83.  This  increase  of  expense  of  fittings,  etc., 
over  profits  on  the  sale  of  stoves,  etc.,  is  not  satisfactorily  explained. 
There  is  no  reason  for  thinking  so  large  an  outlay  as  in  the  last 
two  years  will  be  required  in  the  future,  and  the  probable  increase 
therein  may  safely  be  allowed  to  offset  probable  increase  in  taxes. 
Upon  an  examination  of  the  entire  record,  we  are  satisfied  that  the 
cost  of  manufacturing,  distribution,  and  of  making  collections 
should  not  exceed  $.6812  per  1,000  cubic  feet  at  the  time  the  ordi- 
nance was  enacted.^ 

2  In  Cedar  Rapids  W.  Co.  v.  Cedar  Rapids  (1902),  118  Iowa,  234.  263. 
the  same  Court  said  : 

"  So,  also,  we  may  say  we  see  no  reason  why  plaintiff,  in  addition  to 
operating  expenses,  repairs,  and  other  ordinary  charges,  should  be  allowed 
to  reduce  the  apparent  profits  by  deductions  for  a  restoration  or  rebuilding 
fund.  The  setting  aside  of  such  a  fund  may  be  good  business  policy,  and, 
if  the  company  sees  fit  to  devote  a  portion  of  its  profits  to  that  purpose 
(though,  as  we  understand  the  record,  no  such  fund  has  yet  been  created) , 
no  one  can  complain ;  but  it  is  in  no  just  sense  a  charge  affecting  the  net 
earnings  of  the  works.  To  hold  otherwise  is  to  say  that  the  public  must 
not  only  pay  the  reasonable  and  fair  value  of  the  services  rendered,  but 
must,  in  addition,  pay  the  company  the  full  value  of  its  works  every  forty 
years  —  the  average  period  estimated  by  plaintiff  —  for  all  time  to  come." 


SEC.    IV.]  OPERATING   EXPENSES    AND   MAINTENANCE,  277 

COAL  AND  COKE  EAILWAY  CO.  v.  CONLEY  AND  AVIS. 

67  W.  Va.  129.     1910> 

PoFFENBARGER,  J.     There  are  only  two  items  in  the  statement 
of  expenses  that  might  possibly  include  money  that  ought  not  to 
be  deducted  from  the  income  for  the  purposes  of  the  bill.     They 
are  the  items  designated  "Maintenance  of  Way,"  amounting  to 
$127,059.01,    and    "Maintenance    of    Equipment,"    amounting    to 
$166,207.64.     Under  these  two  headings,  there  might  be  included 
the  cost  of  improvements  upon  the  roadbed  and  track  and  of  new 
or  additional  rolling  stock.     It  is  easy  to  see  how  a  railroad  com- 
pany, if  permitted  to  include  such  costs  in  what  are  designated  as 
expenses  of  Maintenance  of  Way  and  Maintenance  of  Equipment, 
and  other  improvements,  could  absorb  all,  or  a  large  portion,  of 
its  earnings  in  the  cost  of  betterments  of  its  property  and  be  in  a 
position  in  almost  any  year  to  say  it  is  not  earning  a  fair  return 
on  its  investment.   (The  cost  of  betterments  is  obviously  capital 
invested,  and,  if  taken  out  of  the  earnings  of  the  road,  ought  to 
be  regarded,  for  the  purposes  of  a  case  of  this  kind,  as  a  part  of 
the  net  earningsj   Eailroad  Co.  v.  United  States,  99  U.  S.  402,  420. 
/it  is  not  properly  chargeable  to  operating  expenses.     On  the  con- 
trary, it  is  net  profit  earned.     Of  course  the  railway  company  may 
do  what  it  pleases  with  its  profits,  but  if  it  sees  fit  to  devote  them 
to  the  improvement  of  its  road,  or  the  building  of  branch  lines, 
instead  of  declaring  dividends  or  paying  interest  on  its  indebted- 
ness, it  cannot  be  heard  to  say  it  has  not  earned  them.  -  Some  criti- 
cism of  these  two  items  in  the  statement  is  found  in  the  discussion 
of  both  the  bill  and  the  evidence,  but  we  do  not  think  the  Court 
could  say,  upon  the  demurrer  to  the  bill,  in  view  of  the  amount  in- 
vested, that  they  are  out  of  proportion.     The  magnitude  of  the  cost 
of  maintaining  a  new  railroad  in  a  mountainous  section  of  the 
country,  as  well  as  that  of  maintaining  the  efficiency  of  rolling 
stock,  is  obvious  to  all.     This  railroad  is  183  miles  long  and,  ex- 
clusive of  rolling  stock,  cost  something  over  $5,000,000.00,  while 
its  rolling  stock,  owned  and  leased,  cost  something  over  $1,500,- 
000.00.     For  ten  months  the  cost  of  Maintenance  of  Way  amounted 
to  only  about  two  per  cent,  of  the  amount  invested  in  the  railroad, 
and  of  Maintenance  of  Equipment  to  only  about  eleven  per  cent, 
of  the  value' of  the  rolling  stock.     The  charge  for  general  expenses 
is  comparatively  light,  being  only  $32,290.11  for  that  time.     It  is 
impossible  that  extravagant  and  disproportionate  sums  could  have 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


278  KATES.  [chap.    IV. 

been  paid  out  of  this  amount  to  general  officers  as  salaries  and  in 
discharge  of  other  general  expenses.- 


SOUTHEEN  PACIFIC  CO.  v.  BOARD  OF  RAILROAD  COM- 
MISSIONERS OF  CALIFORNIA. 

78  Fed.  236.     1896.* 

The  Attorney  General  objected  to  complainants'  figures  as  to 
operating  expenses,  because  they  included  the  sum  of  $654,826.81 
for  improvements  and  betterments. 

McKenna,  Circuit  Judge.  The  abstract  legality  of  such  charge 
is  established  by  the  Reagan  Case.  The  same  contention  was  made 
there,  and  a  deduction  of  the  sum  of  $302,085.77  was  claimed  to 
have  been  charged  to  operating  expenses,  whereas  it  was  expended  for 
"  Cost  of  road,  equipment,  and  permanent  improvements."  Mr. 
Justice  Brewer,  commenting  on  the  claim,  said : 

"  Again,  the  sum  of  $302,085.77  appears  in  that  table,  under  the 
description  '  Cost  of  road,  equipment,  and  permanent  improvements, 
■  admitted  to  have  been  included  in  operating  expenses,'  and  is  added 
to  the  income  as  though  it  had  been  improperly  included  in  operat- 
ing expenses.  But,  before  this  change  can  be  held  to  be  proper,  it 
is  well  to  see  what  further  light  is  thrown  on  the  matter  by  other 
portions  of  the  report.  That  states  that  there  were  no  extensions 
of  the  road  during  that  year,  so  that  all  of  this  sum  was  expended 
upon  the  road  as  it  was.  Among  the  items  going  to  make  up  this 
sum  of  $302,085.77  is  one  of  $113,212.09  for  rails,  and  it  appears 
from  the  same  report  that  there  was  not  a  dollar  expended  for  rails 
except  as  included  within  this  amount.  Now,  it  goes  without  say- 
ing that,  in  the  operation  of  every  road,  there  is  a  constant  wearing 
out  of  the  rails,  and  a  constant  necessity  for  replacing  old  with  new. 
The  purchase  of  these  rails  may  be  called  '  permanent  improve- 
ments,' or  by  any  other  name ;  but  they  are  what  is  necessary  for 
keeping  the  road  in  serviceable  condition.  Indeed,  in  another  part 
of  the  report,  under  the  head  of  '  Renewals  of  rails  and  ties,'  is 
stated  the  number  of  tons  of  '  New  rails  laid '  on  the  main  line. 
Other  items  therein  are  for  fencing,  grading,  bridging,  and  culvert 
masonry,  bridges  and  trestles,  buildings,  furniture,  fixtures,  etc. 
It  being  shown  affirmatively  that  there  were  no  extensions,  it  is 
obvious  that  these  expenditures  were  those  necessary  for  a  proper 
carrying  on  of  the  business  required  of  the  company." 

2  See  City  of  Erie  v.  Erie  G.  &  M.  Co.  (1908).  78  Kan.  348.  354. 

1  Only  one  point  from  the  opinion  is  here  reprinted,  together  with  a  brief 
statement  of  the  point  in  controversy. —  Ed. 


SEC.    IV.]  OPERATING   EXPENSES    AND    MAINTENANCE.  279 

Substantially  to  the  same  effect  is  Union  Pac.  Ey.  Co.  v.  U.  S., 
99  U.  S.  402.  In  the  latter  case  the  court  was  called  upon  to  in- 
terpret that  clause  of  the  act  of  18G2  in  aid  of  the  construction  of 
the  Union  Pacific  Eailroad,  which  provided  that  "  after  said  road 
is  completed,  and  until  said  bond  and  interest  are  paid,  at  least  5 
per  cent,  of  the  net  earnings  of  said  roads  shall  also  be  applied  to 
the  payment  thereof."  It  may  be  said  that  there  were  several  ele- 
ments in  that  case  which  are  not  in  the  case  at  bar,  but,  neverthe- 
less, the  remarks  Mr.  Justice  Bradley  made  are  substantially  ap- 
plicable.    Speaking  of  when  a  railroad  is  completed,  he  said: 

"  In  one  sense,  a  railroad  is  never  completed.  There  is  never, 
or  hardly  ever,  a  time  when  something  more  cannot  be  done,  and 
is  not  done,  to  render  the  most  perfect  road  more  complete  than' 
it  was  before.  This  fact  is  well  exemplified  by  the  history  of  the 
early  railroads  of  the  country.  At  first,  many  of  them  were  con- 
structed with  a  flat  rail  or  iron  bar,  laid  on  wooden  stringpieces, 
resulting  in  what  was  known  in  former  times  as  '  snake  heads ' ; 
the  bars  becoming  loose,  and  curving  up  in  such  a  manner  as  to 
be  caught  by  the  cars,  and  forced  through  the  floors  amongst  the 
passengers.  Then  came  the  T  rail,  and,  finally,  the  H  rail,  which 
itself  passed  through  many  successive  improvements.  Finally, 
steel  rails,  in  the  place  of  iron  rails,  have  been  adopted  as  the  most 
perfect,  durable,  safe,  and  economical  rails  on  extensive  lines  of 
road.  Bridges  were  first  made  of  wood,  then  of  stone,  then  of  stone 
and  iron.  Grades  originally  crossed,  and,  in  most  cases,  do  still 
cross,  highways  and  other  roads  on  the  same  level.  The  most  im- 
proved plan  is  to  have  them,  by  means  of  bridges,  pass  over  or 
under  intersecting  roads.  A  single  track  is  all  that  is  deemed  nec- 
essary to  begin  with ;  but  now  no  railroad  of  any  pretensions  is  con- 
sidered perfect  until  it  has,  at  least,  a  double  track.  Depots  and 
station  houses  are,  at  first,  mere  sheds,  which  are  deemed  sufficient 
to  answer  the  purpose  of  business.  These  are  succeeded,  as  the 
means  of  the  company  admit,  by  commodious  station  and  freight 
houses,  of  permanent  and  ornamental  structure.  And  so  the  proc- 
ess of  improvement  goes  on ;  so  that  it  is  often  a  nice  question  to 
determine  what  is  meant  by  a  complete,  first-class  railroad." 

And,  declaring  what  are  proper  expenditures,  he  further  said : 

"  Having  considered  the  question  of  receipts  or  earnings,  the 
next  thing  in  order  is  the  expenditures  which  are  properly  charge- 
able against  the  gross  earnings  in  order  to  arrive  at  the  '  net  earn- 
ings,' as  this  expression  is  to  be  understood  within  the  meaning  of 
the  act.  As  a  general  proposition,  net  earnings  are  the  excess  of 
the  gross  earnings  over  the  expenditures  defrayed  in  producing 
them,  aside  from  and  exclusive  of  the  expenditure  of  capital  laid 


280  RATES.  [chap.    IV. 

out  in  constructing  and  equipping  the  works  themselves.  It  may 
often  be  difficult  to  draw  a  precise  line  between  expenditures  for 
construction  and  the  ordinary  expenses  incident  to  operating  and 
maintaining  the  road  and  works  of  a  railroad  company.  The- 
oretically^ the  expenses  chargeable  to  earnings  include  the  general 
expenses  of  keeping  up  the  organization  of  the  company,  and  all 
expenses  incurred  in  operating  the  works  and  keeping  them  in  good 
condition  and  repair;  while  expenses  chargeable  to  capital  include 
those  which  are  incurred  in  the  original  construction  of  the  works, 
and  in  the  subsequent  enlargement  and  improvement  thereof. 
"With  regard  to  the  last-mentioned  class  of  expenditures,  however, 
namely,  those  which  are  incurred  in  enlarging  and  improving  the 
"works,  a  difference  of  practice  prevails  amongst  railroad  companies. 
Some  charge  to  construction  account  every  item  of  expense,  and 
every  part  and  portion  of  every  item,  which  goes  to  make  the  road, 
or  any  of  its  appurtenances  or  equipments,  better  than  they  were 
before;  whilst  others  charge  to  ordinary  expense  account,  and 
against  earnings,  whatever  is  taken  for  these  purposes  from  the 
earnings,  and  is  not  raised  upon  bonds  or  issues  of  stock.  The  lat- 
ter method  is  deemed  the  most  conservative  and  beneficial  for  the 
company,  and  operates  as  a  restraint  against  injudicious  dividends 
and  the  accumulation  of  a  heavy  indebtedness.  The  temptation  is 
to  make  expenses  appear  as  small  as  possible,  so  as  to  have  a  large 
apparent  surplus  to  divide.  But  it  is  not  regarded  as  the  wisest 
and  most  prudent  method.  The  question  is  one  of  policy,  which  is 
usually  left  to  the  discretion  of  the  directors.  There  is  but  little 
danger  that  any  board  will  cause  a  very  large  or  undue  portion  of 
their  earnings  to  be  absorbed  in  permanent  improvements.  The 
practice  will  only  extend  to  those  which  may  be  required  from  time 
to  time  by  the  gradual  increase  of  the  company's  traffic,  the  dis- 
patch of  business,  the  public  accommodation,  and  the  general  pei- 
manency  and  completeness  of  the  works.  When  any  important  im- 
provement is  needed,  such  as  an  additional  track,  or  any  other  mat- 
ter which  involves  a  large  outlay  of  money,  the  owners  of  the  road 
will  hardly  forego  the  entire  suspension  of  dividends  in  order  to 
raise  the  requisite  funds  for  those  purposes,  but  will  rather  take 
the  ordinary  course  of  issuing  bonds  or  additional  stock.  But  for 
making  all  ordinary  improvements,  as  well  as  repairs,  it  is  better 
for  the  stockholders,  and  all  those  Avho  are  interested  in  the  pros- 
perity of  the  enterprise,  that  a  portion  of  the  earnings  should  be 
employed.  .  ,  .  We  are  disposed  to  agree,  therefore,  with  the  judge 
who  delivered  the  concurring  opinion  in  tlie  court  below,  that  the 
twenty-seventh  item  of  expenditure,  as  stated  in  the  table  of  ex- 
penses in  the  eighteenth  finding,  entitled  /Expenditures  for  sta- 


SEC.    IV.]  OPERATING   EXPENSES    AND    MAINTENANCE.  281 

tion  buildings,  shops/  etc.,  is  a  charge  that  may  properly  be  made 
against  earnings ;  since,  as  the  fact  is,  such  expenditures  were 
actually  paid  therefrom,  and  were  not  carried  to  capital  account^ 

The  same  idea  is  variously  illustrated  in  the  following  cases: 
U.  S.  V.  Kansas  Pac.  R.  Co.,  99  U.  S.  455 ;  St.  John  v.  Railway 
Co.,  22  Wall.  136;  Railroad  Co.  v.  Nickals,  119  U.  S.  296,  7  Sup. 
Ct.  209 ;  Warren  v.  King,  108  U.  S.  389,  2  Sup.  Ct.  789 ;  Mobile  & 
0.  R.  Co.  V.  State  of  Tennessee,  153  U.  S.  495,  14  Sup.  Ct.  968; 
Barnard  v.  Railroad  Co.,  7  Allen,  512;  Minot  v.  Paine,  99  Mass., 
106,  107 ;  Railway  Co.  v.  Elkins,  37  N.  J.  Eq.  273 ;  Dent  v.  London 
Tramways  Co.  16  Ch.  Div.  344.^ 


ILLINOIS  CENTRAL  RAILROAD  CO.  v.  INTERSTATE 
COMMERCE  COMMISSION. 

206  U.  S.  441.     1907.^ 

Mr.  Justice  McKenna  delivered  the  opinion  of  the  court. 

The  Commission  finds  that  the  net  and  gross  earnings  of  the  ap- 
pellants have  grown  from  year  to  year,  and  also  that  what  they 
have  reported  as  operating  expenses  have  also  grown.  But  in  these 
operating  expenses  there  were  included  "expenditures  for  real  es- 
tate, right  of  way,  tunnels,  bridges,  and  other  strictly  permanent 
improvements,  and  also  for  equipment,  such  as  locomotives  and 
cars."  The  Commission  expressed  the  opinion  that  such  expendi- 
tures should  not  be  charged  to  a  single  year,  but  "  should  be,  so  far 
as  practicable  and  so  far  as  rates  exacted  from  the  public  are  con- 
cerned, '  projected  proportionately  over  the  future.'  "  And  it  was 
said :  "  If  these  large  amounts  are  deducted  from  the  annual  op- 
erating expenses  reported  by  the  defendants  (appellants),  it  will 
be  found  that  the  percentage  of  operating  expenses  to  earnings  has 
in  some  instances  diminished  and  in  others  increased  to  no  mate- 
rial extent."  The  exact  effect  of  the  difference  of  view  between 
appellants  and  the  Commission  as  to  operating  expenses  there  is  no 
test;  but  it  cannot  be  said,  even  if  the  commission  was  wrong  as 
to  such  expenses,  that  error  in  its  ultimate  conclusion  is  demon- 
strated or  that  the  correctness  of  the  conclusion  is  made  so  doubt- 
ful as  to  justify  a  reversal.  The  findings  show  that  the  old  rates 
were  profitable  and  that  dividends  were  declared  even  when  per- 
manent improvements  and  equipment  were  charged  to  operating 

2  See  Metropolitan  T.  Co.  v.  Houston  T.  C.  R.  R.  Co.    (1898),  90  Fed. 
683,  G90. 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


282  RATES.  [chap.  IV. 

expenses.  But  may  they  be  so  charged?  Appellants  contend  that 
the  answer  should  be  so  obviously  in  the  affirmative  that  it  should 
be  made  an  axiom  in  transportation.  On  principle  it  would  seem 
as  if  the  answer  should  be  otherwise.  It  would  seem  as  if  expendi- 
tures for  additions  to  construction  and  equipment,  as  expenditures 
for  original  construction  and  equipment,  should  be  reimbursed  by 
all  of  the  traffic  they  accommodate  during  the  period  of  their  dura- 
tion, and  that  improvements  that  will  last  many  years  should  not 
be  charged  wholly  against  the  revenue  of  a  single  year.  But  it  is 
insisted  that  Union  P.  K.  Co.  v.  United  States,  99  U.  S.  403, 
establishes  the  contrary.  That  case  was  not  concerned  with 
rates  of  transportation  or  the  rule  which  should  determine  them 
against  shippers.  It  was  concerned  with  the  construction  of 
the  words  "  net  earnings  "  in  an  act  of  Congress,  5  per  cent,  of 
which  earnings  were  provided  to  be  applied  annually  to  a  loan  by 
the  government  to  the  railroad.  Considering  the  provision  of  the 
act  and  its  purpose,  it  was  concluded  "  that  the  true  interest  of 
the  government "  was  "  the  same  as  that  of  stockholders,  and  would 
be  subserved  by  encouraging  a  liberal  application  of  the  earnings 
to  the  improvement  of  the  works."  "  It  is  better,"  it  was  said, 
"for  the  ultimate  security  of  the  government  in  reference  to  the 
payment  of  its  loan,  as  well  as  for  the  service  which  it  may  require 
in  the  transportation  of  its  property  and  mails,  that  $100  should 
be  spent  in  improving  the  works,  than  that  it  should  receive  $5 
towards  the  payment  of  its  subsidy.  If  the  5  per  cent,  of  net 
earnings,  demandable  from  the  company,  amounted  to  a  new  in- 
debtedness, not  due  before,  like  a  rent  accruing  upon  a  lease,  a 
more  rigid  rule  might  be  insisted  on.  But  it  is  not  so ;  the  amount 
of  the  indebtedness  is  fixed  and  unchangeable.  The  amount  of  the 
5  per  cent,  and  its  receipt  at  one  time  or  another  is  simply  a  ques- 
tion of  earlier  or  later  payment  of  a  debt  already  fixed  in  amount. 
If  the  employment  of  any  earnings  of  the  road  in  making  improve- 
ments lessens  the  amount  of  net  earnings,  the  government  loses 
nothing  thereby.  The  only  result  is,  that  a  less  amount  is  presently 
paid  on  its  debt,  while  the  general  security  for  the  whole  debt  is 
largely  increased."  The  interest  of  the  government  in  the  improve- 
ment of  the  road  was  even  greater  than  that  of  a  stockholder.  This 
was  manifest  from  its  munificent  gift  of  lands,  in  addition  to  its 
generous  loan  of  credit.  As  benefactor  of  the  road  and  as  creditor 
of  it,  as  a  government  concerned  with  the  development  of  the  coun- 
try, as  a  money  lender  concerned  with  the  extent  of  security,  "  the 
true  interest"  of  the  United  States  might  be  that  revenue  should 
be  applied  to  improvements.  Payment  of  the  debt  was  only  post- 
poned, not  denied,  and  this  and  the  other  considerations  might  well 


SEC.    IV.]  OPERATIN^G    EXPENSES    AND    MAINTENANCE.  283 

determine  the  construction  of  words  in  the  statute  which  were 
capable  of  different  meanings.  But  such  is  not  the  relation  or  con- 
cern of  a  shipper  of  lumber.  His  right  is  immediate.  He  may 
demand  a  service.  He  must  pay  a  toll,  but  a  toll  measured  by  the 
reasonable  value  of  the  service.  The  elements  of  that  value  may  be 
many  and  complex,  not  always  determinable,  as  we  have  seen,  with 
mathematical  accuracy,  but,  we  think  it  is  clear  that  instrumentali- 
ties which  are  to  be  used  for  years  should  not  be  paid  for  by  the 
revenues  of  a  day  or  year ;  and  this  is  the  principle  of  returns  upon 
capital  which  exists  in  durable  shape.) 


PUGET  SOUXD  ELECTRIC  RAILWAY  v.  RAILROAD  COM- 
MISSION OF  WASHINGTON. 

G5  Wash.  75.     1911.^ 

Morris,  J.  It  is  unquestionably  true  that  the  railway  company 
is  not  bound  to  see  its  property  gradually  deteriorate  in  value  and 
earning  power  without  making  provision  out  of  its  earnings  to 
keep  its  usefulness  unimpaired ;  and  that  it  can  properly  charge  an 
annual  sum  to  care  for  necessary  depreciation  and  waste,  and  have 
such  sum  allowed  in  any  determination  of  what  is  a  proper  return 
upon  its  investment  to  be  approximated  in  fixing  its  rates  of  car- 
riage, i^ut  we  cannot  concede  that  in  so  doing  it  can  make  the 
traffic  of  any  future  year  or  years  bear  all  the  burdens  of  the  de- 
terioration of  past  years.  Each  year  should  carry  the  burden  of 
its  own  wear  and  tear,  and  thus,  when  renewals  become  necessary, 
the  burden  is  equally  borne  by  all  contributing  features.  As  we 
read  it,  the  Supreme  Court  of  the  United  States  has  so  held  in 
Knoxville  v.  Knoxville  Water  Co.,  212  U.  S.  1,  14,  where, 
in  treating  a  like  question,  it  is  said :  "  If,  however,  a  com- 
pany fails  to  perform  this  plain  duty  and  to  exact  suf- 
ficient returns  to  keep  the  investment  unimpaired,  whether  this 
is  the  result  of  unwarranted  dividends  upon  overissues  of  se- 
curities, or  of  omission  to  exact  proper  prices  for  the  output,  the 
fault  is  its  own.  When  therefore,  a  public  regulation  of  its 
prices  comes  under  question,  the  true  value  of  the  property  then 
employed  for  the  purpose  of  earning  a  return  cannot  be  enhanced 
by  a  consideration  of  the  errors  in  management  which  have  been 
committed  in  the  past."  Accepting,  therefore,  the  contention  of 
appellant,  that  it  is  shown  that  from  $140,000  to  $160,000  will  be 
required  annually  for  the  next  three  to  five  years  for  renewals  and 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


284  RATES.  [chap.    IV. 

replacement,  such  an  expenditure  will  not  be  made  necessary  by 
the  deterioration  and  waste  of  these  years  alone ;  but  the  conditions 
necessitating  renewals  and  replacement  are  the  result  of  the  years 
of  wear  and  tear  that  have  gradually  taken  place  since  the  operation 
of  the  road  first  began,  and  each  year  contributing  to  such  a  con- 
dition should  be  charged  with  its  proportionate  share  of  the  burden. 
That  25  per  cent,  of  the  earnings  is  a  sufficient  sum  to  be  set  aside 
each  year  as  a  depreciation  and  renewal  fund  is  clearly  established 
by  the  testimony;  and,  had  this  sum  been  so  set  apart  each  year, 
there  can  be  little  doubt  but  that  the  company  would  now  have  on 
hand  a  sufficient  amount  to  care  for  all  its  present  and  future  needs 
properly  chargeable  to  such  fund.  While  the  question  is  more  of 
an  economic  than  a  legal  one,  and  hence  difficult  of  determination 
in  a  judicial  inquiry,  we  are  satisfied  that  no  injustice  has  been  done 
appellant  in  this  finding. 


THE  MINNESOTA  EATE  CASES. 

230  U.  S.  352.     1913.^ 

Mr.  Justice  Hughes  delivered  the  opinion  of  the  court. 

Apportionment  of  expenses. —  As  already  stated,  it  was  held  in 
dividing  the  freight  operating  expenses,  that  the  cost  of  doing  the 
intrastate  freight  business  was  two  and  one-half  times  that  of  doing 
the  interstate  freight  business.  That  is  to  say,  the  division  of  ex- 
penses was  made  according  to  ton-miles,  interstate  and  intrastate, 
after  the  intrastate  ton-miles  had  been  increased  two  and  one-half 
times. 

The  substantial  question  is  whether  the  proof  established  this 
extra  cost  with  that  degree  of  certainty  which  is  requisite  to  sup- 
port a  decree  invalidating  the  state  rates. 

It  appeared  that  the  cost  of  intrastate  business  was  not  kept 
separately  or  set  up  in  the  accounts  or  statistics  of  the  company. 

The  president  of  the  company  testified  as  to  his  judgment  in 
the  matter,  which  was  based,  in  the  absence  of  such  accounts, 
upon  the  general  facts  of  operation.  His  testimony  was  supported 
by  that  of  other  eminent  railroad  men,  who  testified  in  the  Great 
Northern  and  Minneapolis  and  St.  Louis  cases.  The  elements  en- 
tering into  the  greater  expense  of  doing  intrastate  business  were 
defined  to  be:  That  the  average  haul  was  shorter,  being  (in  the 
case  of  the  Northern  Pacific)  104.52  miles  for  intrastate  transporta- 
tion as  against  485.3  miles  for  interstate  transportation;  that  the 
state  business  had  to  be  handled  twice  at  terminals;  that  the  local 

1  Only  one  point  from  this  voluminous  opinion  is  here  reprinted. —  Ed. 


SEC.    IV.]  OPEEATING    EXPENSES    AND    MAINTENANCE.  285 

short-haul  business  used  most  valuable  terminal  facilities  in  order 
to  obtain  its  proper  handling  from  the  larger  distributing  centers, 
and  used  those  facilities  to  a  greater  extent  for  the  tons  handled 
than  did  the  longer  through  business;  that  the  amount  of  clerical 
and  warehouse  labor  in  connection  with  the  local  business  was  much 
greater  than  in  the  case  of  the  long-haul  through  business;  that 
the  chances  of  damage  were  greater  in  the  short-haul  business  be- 
cause of  tbe  greater  number  of  individual  transactions;  that  in  the 
short-haul  business  there  was  an  excess  of  equipment  for  loading 
and  unloading;  that  local  or  way  freight  trains  were  "loaded 
lighter  " ;  that  the  wear  and  tear  on  the  local  trains  was  greater  be- 
cause of  frequent  stopping  and  starting;  that  there  was  increased 
switching,  resulting  in  greater  damage  to  equipment  and  tracks; 
that  the  local  train  was  generally  on  the  road  more  hours  than  a 
through  train,  and  therefore  consumed  more  coal;  that  in  the 
smaller  stations  the  amount  of  shifting  was  large;  that  many  of 
the  local  trains  carried  passengers,  involving  two  stops  at  each  sta- 
tion, one  for  passengers  and  the  other  for  the  local  freight  work; 
that  the  manner  of  operation  of  local  trains  increased  the  chances 
of  injury  to  employees ;  that  the  short-haul  business  moved  irregu- 
larly and  spasmodically,  and  that  its  facilities  were  worked  at  their 
full  capacity  only  for  limited  periods. 

From  these  considerations,  which  were  elaborated  in  the  testi- 
mony, the  witness  reached  the  conclusion  that  the  "  so-called  local 
short-haul  intrastate  business  costs  anywhere  from  three  to  six  or 
seven  times  as  much  as  the  so-called  long-haul  through  interstate 
business."  In  the  Great  Northern  Case,  the  witnesses  expressed 
the  opinion  that  the  extra  cost  of  intrastate  freight  was  three  or 
four  times  greater  than  that  of  the  interstate  freight.  One  wit- 
ness said  that  it  would  be  from  four  to  six  times.  These  estimates, 
it  is  understood,  had  relation  to  the  cost  per  ton  mile. 

The  appellants  do  not  dispute  that  business  carried  for  short 
distances  on  local  trains  is  more  expensive  than  the  handling  of 
other  business,  but  it  is  insisted  that  this  is  due  solely  to  the  dif- 
ferent train  service  that  it  receives.  It  is  said  that  all  through 
trains  start  from  divisional  points  and  run  from  one  end  of  the 
division  to  the  other  without  stop;  that  the  local  trains  are  made 
up  of  cars  carrying  business  destined  for  points  intermediate  the 
termini  of  the  division,  and  take  up  all  traffic  originating  at  the 
intermediate  stations ;  that  the  word  "  local,"  as  applied  to  these 
trains,  is  not  synonymous  with  intrastate,  but  that  the  local  trains 
carry  a  large  part  of  the  interstate  traffic,  both  in  receiving  and 
distributing  it;  and  that  by  far  the  greater  part  of  the  extra  cost 
of  the  local  train  service  is  properly  chargeable  to  interstate  busi- 


286  KATES.  [chap.    IV. 

ness.  It  is  also  insisted  that  so  far  as  this  extra  expense  can  be 
charged  to  intrastate  business,  it  is  adequately  met  by  the  addi- 
tional revenue  of  that  business,  which  per  ton  mile,  as  compared 
with  the  interstate  business,  is  as  1.4387  to  1.0000. 

To  establish  these  propositions,  and  to  meet  the  testimony  of 
the  complainants'  witnesses,  the  appellants  introduced  an  elaborate 
series  of  calculations,  made  by  a  professional  accountant,  which 
were  deduced  from  the  results  of  an  extended  examination  of  the 
records  of  the  companies.  The  witness  made  computations  as  to 
the  character  of  the  freight  on  each  road,  dividing  it  between 
through  and  local  freight  upon  each  operating  division,  and  then 
subdividing  it  between  intrastate  and  interstate  freight.  It  is  con- 
tended by  the  appellants  that  these  calculations  are  sufficient  to 
show  that  in  the  case  of  the  Northern  Pacific,  about  91  per  cent, 
of  the  freight  on  through  trains  was  interstate  and  about  9  per  cent, 
intrastate,  and  that  on  the  local  trains  the  interstate  freight 
amounted  to  68.67  per  cent.,  and  the  intrastate,  31.33  per  cent. 
Calculations  of  this  witness  were  also  introduced,  showing  his  di- 
vision of  the  total  expenses  between  the  passenger  and  freight  busi- 
ness, and  then  in  each  department  between  the  interstate  and  in- 
trastate business;  and  by  means  of  these,  it  Avas  estimated  that, 
under  the  rates  in  question  (assuming  them  to  have  been  applied 
to  the  business  of  the  fiscal  year  ending  June  30,  1907,  to  which 
the  calculations  were  directed),  the  net  profits  on  the  intrastate 
business  as  a  whole  would  have  been  slightly  more  than  6  per  cent. 
upon  an  amount  equal  to  the  share  of  property  value  attributed  to 
that  business  by  the  master's  estimate  and  apportionment  of  total 
value. 

These  computations  are  assailed  by  the  appellees  as  inaccurate 
and  as  based  upon  erroneous  estimates.  We  shall  not  go  into  the 
details,  and,  for  the  present  purpose,  we  may  assume  that  the  ap- 
pellees are  right  in  their  criticism. 

Our  conclusions  may  be  briefly  stated.  The  statements  of  the 
complainants'  witnesses  as  to  the  extra  cost  of  intrastate  business, 
while  entitled  to  respect  as  expressions  of  opinion,  manifestly  in- 
volve wide  and  difficult  generalizations.  They  embrace,  without 
the  aid  of  statistical  information  derived  from  appropriate  tests 
and  submitted  to  careful  analysis,  a  general  estimate  of  all  the  con- 
ditions of  transportation,  and  an  effort  to  express  in  the  terms  of 
a  definite  relation,  or  ratio,  what  clearly  could  be  accurately  ar- 
rived at  only  by  prolonged  and  minute  investigation  of  particular 
facts  with  respect  to  the  actual  traffic  as  it  was  being  carried  over 
the  line.  The  extra  cost,  as  estimated  by  these  witnesses,  is  predi- 
cated not  simply  of  haulage  charges,  but  of  all  the  outlays  of  the 


SEC.    IV.]  OPERATING    EXPENSES    AND    MAINTENANCE.  287 

freight  service,  including  the  share  of  the  expenses  for  main- 
tenance of  way  and  equipment  assigned  to  the  freight  department. 
And  the  ratio,  to  be  accurately  stated,  must  also  express  the  re- 
sults of  a  suitable  discrimination  between  the  interstate  and  intra- 
state traffic  on  through  and  local  trains  respectively,  and  of  an  at- 
tribution of  the  proper  share  of  the  extra  cost  of  local  train  service 
to  the  interstate  traffic  that  uses  it.  The  wide  range  of  the  esti- 
mates of  extra  cost,  from  three  to  six  or  seven  times  that  of  the 
interstate  business  per  ton  mile,  shows  both  the  difficulty  and  the 
lack  of  certainty  in  passing  judgment. 

We  are  of  opinion  that,  on  an  issue  of  this  character,  involving 
the  constitutional  validity  of  state  action,  general  estimates  of  the 
sort  here  submitted,  with  respect  to  a  subject  so  intricate  and  im- 
portant, should  not  be  accepted  as  adequate  proof  to  sustain  a  find- 
ing of  confiscation.  While  accounts  have  not  been  kept  so  as  to 
show  the  relative  cost  of  interstate  and  intrastate  business,  giving 
particulars  of  the  traffic  handled  on  through  and  local  trains,  and 
presenting  data  from  which  such  extra  cost  as  there  may  be,  of 
intrastate  business,  may  be  suitably  determined,  it  would  appear 
to  have  been  not  impracticable  to  have  had  such  accounts  kept  or 
statistics  prepared,  at  least  during  test  periods,  properly  selected. 
dt  may  be  said  that  this  would  have  been  a  very  difficult  matter, 
but  the  company,  having  assailed  the  constitutionality  of  the  state 
acts  and  orders,  was  bound  to  establish  its  case,  and  it  was  not  en- 
titled to  rest  on  expressions  of  judgment  when  it  had  it  in  its  power 
to  present  accurate  data  which  would  permit  the  court  to  draw 
the  right  conclusion. 

We  need  not  separately  review  the  findings  with  respect  to  the 
division  of  passenger  expenses,  as  the  same  considerations  are  in- 
volved, with  the  distinction,  however,  that  the  extra  cost  attributed 
to  the  intrastate  business  is  relatively  small  as  compared  with 
that  charged  to  intrastate  freight.  And,  in  view  of  the  conclusions 
reached  on  the  controlling  questions  we  have  considered,  we  ex- 
press no  opinion  with  respect  to  the  method  adopted  in  dividing 
expenses  between  the  passenger  and  freight  departments. 

For  the  purpose  of  determining  whether  the  rates  permit  a  fair 
return,  the  results  of  the  entire  intrastate  business  must  be  taken 
into  account.  During  the  test  year  the  entire  revenue,  as  found, 
from  the  intrastate  business,  passenger  and  freight,  amounted  to 
$2,897,912.26.  All  the  rates  in  question  were  in  force  save  the 
commodity  rates,  and  it  is  further  found  that  the  loss  that  would 
have  accrued  in  intrastate  commodity  business,  by  the  application 
of  the  commodity  rates  which  were  under  injunction,  would  have 
amounted  to  $2l",493.67. 


288  KATES.  [chap.  IV. 

As  neither  the  share  of  the  expenses  properly  attributable  to  the 
intrastate  business,  nor  the  value  of  the  property  employed  in  it, 
was  satisfactorily  shown,  and  hence  it  did  not  appear  upon  the 
facts  proved  that  a  fair  return  had  been  denied  to  the  company, 
we  are  of  the  opinion  that  the  complainant  failed  to  sustain  his 
bill.2 


Section  5. 


The  Capital,  upon  Which  a  Retukn  Should  Be 

Eaened. 

AMES  V.  UNION  PACIFIC  EAILWAY  CO. 

64  Fed.   165.     1894.^ 

Brewer,  Circuit  Justice.  In  each  of  these  three  cases,  respec- 
tively, the  plaintiffs  are  stockholders  in  the  corporation  first  named 
therein  as  party  defendant.  In  the  first  the  defendants  are  the 
Union  Pacific  Eailway  Company,  a  corporation  created  under  the 
laws  of  congress,  and  owning  and  operating  a  railroad  partly  within 
the  limits  of  the  state  of  Nebraska;  the  St.  Joseph  &  Grand  Island 
Eailroad  Company,  the  Omaha  &  Republican  Valley  Eailroad  Com- 
pany, and  the  Kansas  City  &  Omaha  Eailroad  Company,  corpora- 
tions organized  under  the  laws  of  the  states  of  Kansas  and  Nebraska, 
whose  stock  is  substantially  owned  and  whose  lines  are  controlled 
and  operated  by  the  Union  Pacific  Eailway  Company  and  certain 
officers  of  the  state  of  Nebraska,  constituting  its  board  of  trans- 
portation, together  with  the  secretaries  thereof.  In  the  second  the 
defendants  are  the  Chicago  &  Northwestern  Eailroad  Company,  a 
corporation  organized  and  existing  under  the  laws  of  the  states  of 
Illinois,  Wisconsin,  and  Iowa;  the  Fremont,  Elkhorn  &  Missouri 
Valley  Eailroad  Company,  a  corporation  organized  under  the  laws 
of  the  state  of  Nebraska;  and  the  Chicago,  St.  Paul,  Minneapolis 
&  Omaha  Eailroad  Company,  a  corporation  organized  under  the 
laws  of  the  states  of  Minnesota  and  Nebraska, —  both  of  which 
companies  are  owned  and  their  roads  operated  by  the  Chicago  & 
Northwestern  Eailroad  Company;  and,  in  addition,  the  board  of 
transportation  of  the  state  of  Nebraska,  and  its  secretaries.  In 
the  third  case  the  defendants  are  the  Chicago,  Burlington  &  Quincy 
Eailroad  Company,  a  corporation  organized  and  existing  under  the 
laws  of  the  states  of  Illinois  and  Iowa,  which  owns,  controls,  and 

2  See  Woods  v.  Vandalia  R.  R.  Co.  (1913),  231  U.  S.  L 
1  Part  of  the  opinion  is  omitted. —  Ed. 


SEC.    v.]  THE   CAPITAL.  289 

operates,  in  the  name  of  the  Burlington  &  Missouri  Eiver  Railroad 
Company  in  Nebraska,  certain  lines  within  that  state;  and  in  ad- 
dition the  state  board  of  transportation,  and  its  secretaries. 

What  is  the  test  by  which  the  reasonableness  of  rates  is  deter- 
mined? This  is  not  yet  fully  settled.  Indeed,  it  is  doubtful 
whether  any  single  rule  can  be  laid  down,  applicable  to  all  cases. 
If  it  be  said  that  the  rates  must  be  such  as  to  secure  to  the  owners 
a  reasonable  per  cent,  on  the  money  invested,  it  will  be  remembered 
that  many  things  have  happened  to  make  the  investment  far  in 
excess  of  the  actual  value  of  the  property, —  injudicious  contracts, 
poor  engineering,  unusually  high  cost  of  material,  rascality  on  the 
part  of  those  engaged  in  the  construction  or  management  of  the 
property.  These  and  many  other  things,  as  is  well  known,  are 
factors  which  have  largely  entered  into  the  investments  with  which 
many  railroad  properties  stand  charged.  Now,  if  the  public  was 
seeking  to  take  title  to  the  railroad  by  condemnation,  the  present 
value  of  the  property,  and  not  the  cost,  is  that  which  would  have 
to  pay.  In  like  manner,  it  may  be  argued  that,  when  the  legisla- 
ture assumes  the  right  to  reduce,  the  rates  so  reduced  cannot  be 
adjudged  unreasonable  if,  under  them,  there  is  earned  by  the  rail- 
road company  a  fair  interest  on  the  actual  value  of  the  property. 
It  is  not  easy  to  always  determine  the  value  of  railroad  property, 
and  if  there  is  no  other  testimony  in  respect  thereto  than  the 
amount  of  stock  and  bonds  outstanding,  or  the  construction  ac- 
count, it  may  be  fairly  assumed  that  one  or  other  of  these  repre- 
sents it,  and  computation  as  to  the  compensatory  quality  of  rates 
may  be  based  upon  such  amounts.  In  the  cases  before  us,  how- 
ever, there  is  abundant  testimony  that  the  cost  of  reproducing  these 
roads  is  less  than  the  amount  of  the  stock  and  bond  account,  or 
the  cost  of  construction,  and  that  the  present  value  of  the  prop- 
erty is  not  accurately  represented  by  either  the  stocks  and  bonds, 
or  the  original  construction  account.  Nevertheless,  the  amount  of 
money  that  has  gone  into  the  railroad  property  —  the  actual  in- 
vestment, as  expressed,  theoretically,  at  least,  by  the  amount  of 
stock  and  bonds  —  is  not  to  be  ignored,  even  though  such  sum  is 
far  in  excess  of  the  present  value.  It  was  said  in  the  case  of 
Eeagan  v.  Trust  Co.,  154  U.  S.  412,  14  Sup.  Ct.  1059 : 

"  It  is  unnecessary  to  decide,  and  we  do  not  wish  to  be  under- 
stood as  laying  down  an  absolute  rule,  that  in  every  case  a  failure 
to  produce  some  profit  to  those  who  have  invested  their  money  in 
the  building  of  a  road  is  conclusive  that  the  tariff  is  unjust  and 
unreasonable.  And  yet  justice  demands  that  every  one  should  re- 
/  ceive  some  compensation  for  the  use  of  his  money  or  property,  if 
'    it  be  possible,  without  prejudice  to  the  rights  of  others." 


290  RATES.  [chap.   IV. 

It  is  not  always  reasonable  to  cast  the  entire  burden  of  the  de- 
preciation on  those  who  have  invested  their  money  in  railroads. 
Take  the  Union  Pacific  Eailway,  for  illustration.  At  the  time 
the  government  created  the  corporation,  to  induce  the  building  of 
this  transcontinental  road  through  a  largely  unoccupied  territory, 
it  loaned  to  the  company  $16,000  a  mile;  taking  as  security  there- 
for a  second  lien  on  the  property,  and  granting  to  the  corporation 
the  right  to  create  a  prior  lien  to  an  equal  amount,  which  was 
done.  There  is  testimony  tending  to  show  that  the  road  in  Ne- 
braska could  be  built  to-day  for  $20,000  a  mile.  Would  it  be  full 
justice  to  the  government,  would  it  satisfy  the  common  sense  of 
right  and  wrong,  would  it  be  reasonable,  for  the  state  of  jSTebraska 
to  so  reduce  the  rates  that  the  earnings  of  the  road  would  only 
pay  ordinary  interest  on  $20,000  a  mile,  and  so,  the  holders  of 
the  first  lien  being  paid  their  interest,  the  government  be  forced 
to  be  content  with  only  interest  on  one-fourth  of  its  investment? 
Or,  to  put  the  case  in  a  little  stronger  light,  suppose  the  promoter 
of  this  enterprise  had  been  some  private  citizen,  who  had  advanced 
his  $16,000  a  mile  as  a  second  lien,  and  that  the  road  could  be  con- 
structed to-day  for  only  $16,000  a  mile.  Would  it  be  reasonable 
and  just  to  so  reduce  rates  as  to  simply  pay  to  the  holders  of  the 
first  lien  reasonable  interest,  and  leave  him  without  any  recom- 
pense for  his  investment  ?  Is  there  not  an  element  of  equity  which 
puts  the  reduction  of  rates  in  a  different  attitude  from  the  abso- 
lute taking  of  the  property  by  virtue  of  eminent  domain?  In  the 
latter  case,  while  only  the  value  is  paid,  yet  that  value  is  actually 
paid,  and  the  owners  may  reinvest,  and  take  the  chances  of  gain 
elsewhere,  whereas,  if  the  property  is  not  taken,  the  owners  have 
no  other  recourse  than  to  receive  the  sum  which  the  property  they 
must  continue  to  own  will  earn  under  the  reduced  rates.  Consid- 
erations such  as  these  compel  me  to  say  that  I  think  there  is  no 
hard  and  fast  test  which  can  be  laid  down  to  determine  in  all  cases 
whether  the  rates  prescribed  by  the  legislature  are  just  and  rea- 
sonable, and  that  often  many  factors  enter  into  the  determination 
of  the  problem.  Obviously,  however,  the  effect  of  the  reduction 
Tipoij  the  earnings  is  the  first  and  principal  matter  to  be  consid- 
ered.) This  is  a  matter  of  computation.  The  power  of  regulating 
railroads  is  often  said  to  be  a  legislative  power  vested  in  the  law- 
making body,  to  be  exercised  for  the  general  welfare.  Within  the 
term  "  regulation  "  are  embraced  two  ideas  :  One  is  the  mere  con- 
trol of  the  operation  of  the  roads,  prescribing  the  rules  for  the 
management  thereof, —  matters  which  affect  the  convenience  of  the 
public  in  their  use.  Eegulation,  in  this  sense,  may  be  considered 
as  purely  public  in  its  character,  and  in  no  manner  trespassing 


gj;Q_    v.]  THE    CAPITAL.  291 

upon  the  rights  of  the  owners  of  railroads.  But  within  the  scope 
of  the  word  "  regulation,"  as  commonly  used,  is  embraced  the  idea 
of  fixing  the  compensation  which  the  owners  of  railroad  property 
shall  receive  for  the  use  thereof ;  and  when  regulation,  in  this  sense, 
is  attempted,  it  necessarily  affects  the  property  interests  of  the 
railroad  owners ;  and  it  is  "  regulation,"  in  this  sense  of  the  term, 
that  we  are  to  consider  in  the  present  cases. 

There  are  certain  matters  which  embarrass  these  cases,  and  ren- 
der all  computations  more  than  ordinarily  difficult.  One  is  this: 
The  various  companies  are  doing  an  interstate  as  well  as  a  local 
business.  If  these  roads  were  wholly  within  the  state,  and  only 
local  business  done  by  them,  the  computation  would  be  much  sim- 
plified, and  the  effect  of  the  reduction  in  rates  upon  the  property 
more  easily  disclosed.  But  all  of  these  roads  are  interstate  roads, 
and  a  large  portion  of  their  business  is  interstate  business.  Some 
of  it  is  local  business  in  other  states  than  Nebraska.  Now,  it  will 
not  do  to  look  simply  at  the  gross  earnings,  and,  because  the  reduc- 
tion therein  made  by  the  enforcement  of  this  statute  still  leaves 
enough  to  pay  reasonable  compensation  to  the  owners  of  the  prop- 
erty, uphold  the  act,  because,  if  the  legislature  of  Nebraska  can 
put  in  force  this  tariff  for  local  business,  the  legislatures  of  other 
states  through  which  these  roads  run,  and  the  congress  of  the 
United  States,  may  make  corresponding  reductions  in  the  rates  on 
all  other  business,  local  and  interstate,  and  the  aggregate  of  such 
reductions  might  entirely  destroy  all  earning  capacity  from  the 
property. 

Another  matter  to  be  noticed  is  this:  There  is  in  this  act  no 
interference  with  the  passenger  tariff,  but  only  a  maximum  for 
freight  rates.  So  we  cannot  place  all  the  local  expenses  over 
against  all  the  local  receipts,  and  draw  our  conclusions  therefrom. 
We  have  an  attempt  by  the  legislature  to  prescribe  a  maximum 
tariff  for  only  the  transportation  of  freight  within  the  limits  of 
Nebraska,  and  are  called  upon  to  determine  whether  the  rates  so 
fixed  are  unreasonable,  and  afford  no  fair  compensation  to  those 
who  have  invested  their  means  in  these  railroad  properties.  In 
order  to  determine  this,  we  must  ascertain  what  it  costs  to  carry 
this  local  freight,  what  the  receipts  have  been  therefrom,  and  what 
reduction  wiU  be  made  in  such  receipts  by  the  application  of  this 
act,  and  then  we  must  take  such  proportion  of  the  gross  investment 
in  the  roads  as  the  present  earnings  from  local  freights  bear  to  the 
total  earnings  of  the  road.  From  these  computations,  we  may  see 
whether  the  reduction  made  by  this  act  in  the  local  freights,  if 
applied  to  all  the  company's  business,  would  leave  any  compensa- 
tion to  the  owners,  and,  if  so,  how  much.     Obviously,  the  problem 


292  RATES.  [chap.  IV. 

thus  presented  is  one  of  exceeding  difficulty.  Fortunately,  we 
have  in  Mr.  Dilworth,  the  secretary  of  the  state  board  of  transporta- 
tion, one  of  the  defendants'  witnesses,  a  gentleman  whose  compe- 
tency and  credibility  are  unchallenged.  In  the  computations 
which  I  have  made,  I  have  relied  mainly  on  his  figures. 

The  conclusion  to  which  I  have  come  is  that,  having  regard  to 
the  present  condition  of  affairs  in  the  state,  the  present  volume  of 
business  done  over  these  roads,  and  any  probabilities  of  an  early 
change  in  that  volume,  a  reduction  of  291/2  per  cent,  in  the  rates 
for  local  freight  is  unjust  and  unreasonable  to  those  who  have  in- 
vested their  money  in  these  railroad  properties.  I  appreciate  fully 
the  embarrassments  and  difficulties  attending  an  investigation  of 
this  kind.  I  am  reluctant,  as  every  judge  should  be,  to  interfere 
with  the  deliberate  judgment  of  the  legislature.  I  have  taken 
much  time  to  study  this  case  in  all  its  relations,  and  have  come, 
though  reluctantly,  to  the  conclusion  I  have  stated,  and  am  there- 
fore constrained  to  order  decrees  in  behalf  of  the  plaintiffs,  stay- 
ing the  enforcement  of  this  tariff  upon  the  companies  named  in 
the  bills.  It  may  be  said  that,  even  if  furnishing  no  reasonable 
remuneration  to-day,  the  result  might  be  different  under  an  in- 
crease of  business.  That,  of  course,  is  possible;  and  it  may  be 
that,  as  the  volume  of  business  increases,  the  time  will  come  when 
the  rates  fixed  by  this  house  roll  33  will  be  reasonable  and  just. 
So  there  should  be  entered,  as  a  proviso  to  the  decrees,  that  leave 
is  reserved  to  the  defendants,  at  any  time  that  they  are  so  advised, 
to  move  the  court  for  a  reinvestigation  of  the  question  of  the  rea- 
sonableness of  these  rates.^ 

2  In  Pennsylvania  R.  R.  Co.  v.  Philadelphia  County  (1908),  220  Pa.  St. 
100,  the  Court  said,  at  page  115  :  "  What  is  a  fair  profit  is  a  complicated 
and  difficult  question,  but  there  are  certain  elements  that  are  plainly  to  be 
regarded  to  avoid  injustice,  such  as  the  original  investment,  the  risks  as- 
sumed at  that  time,  the  returns  as  compared  with  other  enterprises  as  nearly 
similar  as  may  be,  the  cost  of  maintenance  and  improvement,  the  prospects 
of  increase  and  the  present  value  in  view  of  the  preceding  elements.  In- 
justice is  done  by  anything  that  fails  to  consider  these,  and  to  deal  equi- 
tably with  the  private  as  well  as  the  public  interests  involved.  It  is  not 
necessarily  regulated  by  what  others  would  now  make  the  venture  for, 
under  the  present  circumstances  and  with  present  knowledge.  The  public 
having  long  reaped  the  incidental  profits  from  the  develonment  of  the  coun- 
try by  the  enterprise  and  venture  of  capital,  in  the  increased  value  of  land, 
the  opening  of  new  and  wider  markets  for  crops  and  manufactures  and  the 
facility  of  intercourse  and  exchange  for  persons  and  property,  the  courts 
should  not  now  ignore  this  aspect  of  the  subject  in  considering  the  ques- 
tion of  injustice  to  the  corporators." 


SEC.    v.]  THE   CAPITAL.  293 


SAN  DIEGO  LAXD  AND  TOWN  CO.  v.  CITY  OF  NATIONAL 

CITY. 

74   Fed.   70.     1890.^ 

Eoss,  Circuit  Judge.  The  municipality  known  as  "  The  City  of 
National  City  "  having,  through  its  board  of  trustees,  established 
by  ordinance  the  rates  at  which  the  complainant  corporation  should 
furnish  the  city  and  its  inhabitants  with  water  for  domestic  pur- 
poses and  purposes  of  irrigation,  for  the  year  commencing  July  1, 
1895,  and  ending  July  1,  1896,  the  complainant  commenced  this  suit 
for  the  purpose  of  obtaining  a  decree  of  this  court  adjudging  that 
the  provisions  of  the  constitution  and  laws  of  the  state  of  California 
pursuant  to  which  the  proceedings  by  the  board  of  trustees  of  the 
defendant  corporation  fixing  the  rates  were  had,  be  declared  to  be 
in  violation  of  the  fourteenth  amendment  to  the  constitution  of  the 
United  States,  and  that  the  rates  so  established  be,  on  that  ground, 
annulled,  or,  in  the  event  the  court  shall  determine  that  the  provi- 
sions of  the  constitution  and  laws  of  the  state  of  California  do  not 
contravene  the  constitution  of  the  United  States,  then  that  the  rates 
fixed  by  the  board  of  trustees  of  the  defendant  corporation  be  de- 
creed to  be  arbitrary,  unreasonable,  and  unjust,  and  for  that  reason 
void,  and  their  enforcement  enjoined,  and  that  the  board  of  trustees 
be  ordered  and  required  to  adopt  a  new  and  reasonable  rate  of 
charge,  and  that  it  be  decreed  that  the  complainant  corporation 
is  entitled  to  charge  and  collect  for  "  water  rights,"  at  reasonable 
rates,  as  a  condition  upon  which  it  will  furnish  water  to  the  in- 
habitants of  the  municipality  for  the  purposes  of  irrigation,  inde- 
pendent of  the  rates  fixed  by  the  board  of  trustees  for  water  sold  and 
furnished  by  the  company. 

To  compel  the  complainant  to  supply  the  people  of  the  munici- 
pality with  water  acquired  by  it  without  just  compensation  would 
manifestly  be  nothing  short  of  confiscation.  To  what  extent  munic- 
ipal authorities  may  go  in  that  direction,  without  reaching  the  pro- 
hibited point,  has  never  yet  been  definitely  fixed  by  judicial  decision, 
but  that  the  power  has  a  limit  has  been  decided.  Thus,  in  Eeagan 
i'.  Trust  Co.,  154  U.  S.  363-399,  14  Sup.  Ct.  1047,  the  supreme 
court  said : 

"  It  is  within  the  scope  of  judicial  power,  and  a  part  of  judicial 
duty,  to  restrain  anything  which,  in  the  form  of  a  regulation  of 
rates,  operates  to  deny  to  the  owners  of  property  invested  in  the 
business  of  transportation  that  equal  protection  which  is  the  con- 

1  Part  of  the  opinion  is  omitted. —  Ed. 


294  EATES.  •  [chap.    IV. 

stitutional  right  of  all  owners  of  other  property.  There  is  nothing 
new  or  strange  in  this.  It  has  always  been  a  part  of  the  judicial 
function  to  determine  whether  the  act  of  one  party  (whether  that 
party  be  a  single  individual,  an  organized  body,  or  the  public  as  a 
whole)  operates  to  divest  the  other  party  of  any  rights  of  person  or 
property.  In  every  constitution  is  the  guaranty  against  the  taking 
of  private  property  for  public  use  without  just  compensation.  The 
equal  protection  of  the  laws  which,  by  the  fourteenth  amendment, 
no  state  can  deny  to  the  individual,  forbids  legislation,  in  whatever 
form  it  may  be  enacted,  by  which  the  property  of  one  individual  is, 
without  compensation,  wrested  from  him  for  the  benefit  of  another 
or  of  the  public.  This,  as  has  been  often  observed,  is  a  government 
of  law,  and  not  a  government  of  men ;  and  it  must  never  be  forgotten 
that  under  such  a  government,  with  its  constitutional  limitations 
and  guaranties,  the  forms  of  law  and  the  machinery  of  govern- 
ment, with  all  their  reach  and  power,  must,  in  their  actual  workings, 
stop  on  the  hither  side  of  the  unnecessary  and  uncompensated  taking 
or  destruction  of  any  private  property,  legally  acquired  and  legally 
held." 

In  the  same  case  the  court  said  that : 

"  It  is  unnecessary  to  decide,  and  we  do  not  wish  to  be  understood 
as  laying  down  as  an  absolute  rule,  that  in  every  case  a  failure  to 
produce  some  profit  to  those  who  have  invested  their  money  in  the 
building  of  a  road  is  conclusive  that  the  tarifl:  is  unjust  and  un- 
reasonable. And  yet  justice  demands  that  every  one  should  receive 
some  compensation  for  the  use  of  his  mone}^  or  property,  if  it  be 
possible  without  prejudice  to  the  rights  of  others." 

In  the  subsequent  case  of  Ames  v.  Eailway  Co.,  64  Fed.  165,  177, 
Mr.  Justice  Brewer,  sitting  in  the  circuit  court,  and  having  under 
consideration  an  act  of  the  legislature  of  Nebraska  prescribing  the 
maximum  rates  for  transportation  of  freight  by  railroads  within 
that  state,  said : 

"  What  is  the  test  by  which  the  reasonableness  of  rates  is  deter- 
mined? This  is  not  yet  fully  settled.  Indeed,  it  is  doubtful 
whether  any  single  rule  can  be  laid  down,  applicable  to  all  cases. 
If  it  be  said  that  the  rates  must  be  such  as  to  secure  to  the  owners 
a  reasonable  per  cent,  on  the  money  invested,  it  will  be  remembered 
that  many  tbings  have  happened  to  make  the  investment  far  in 
excess  of  the  actual  value  of  the  property, —  injudicious  contracts, 
poor  engineering,  unusually  high  cost  of  material,  rascality  on  the 
part  of  those  engaged  in  the  construction  or  management  of  the 
property.  These  and  many  other  things,  as  is  well  known,  are 
factors  which  have  largely  entered  into  the  investments  with  which 
many  railroad  properties  stand  charged.     Now,  if  the  public  was 


SEC.   v.]  THE    CAPITAL.  295 

seeking  to  take  title  to  the  railroad  by  condemnation,  tlie  present 
value  of  the  property,  and  not  the  cost,  is  that  which  [it]  would 
have  to  pay.  In  like  manner,  it  may  be  argued  that,  when  the 
legislature  assumes  the  right  to  reduce,  the  rates  so  reduced  cannot 
be  adjudged  unreasonable  if  under  them  there  is  earned  by  the 
railroad  company  a  fair  interest  on  the  actual  value  of  the  property." 

In  Spring  Valley  Waterworks  v.  City  of  San  Francisco,  supra,  the 
supreme  court  of  California,  in  speaking  of  the  provision  of  the  con- 
stitution of  that  state  here  in  question,  held  that,  in  order  to  justify 
tl)e  court  in  setting  aside  the  rates  fixed  by  a  municipal  corporation, 
"/there  must  be  actual  fraud  in  fixing  the  rates,  or  they  must  be  so 
pWpably  and  grossly  unreasonable  and  unjust  as  to  amount  to  the 
same  thing."/  83  Cal.  306,  23  Pac.  910,  1046.  To  the  latter  rule,— 
that  is  to  say,  that  there  must  be  actual  fraud,  or  its  equivalent,  on 
the  part  of  the  municipal  authorities,  in  order  to  justify  a  court  in 
adjudging  the  rates  established  by  them  unreasonable, —  I  cannot 
yield  assent.  The  same  court,  in  the  same  case,  in  construing  the 
constitutional  provision,  said: 

"  When  the  constitution  provides  for  the  fixing  of  rates  or  com- 
pensation, it  means  reasonable  rates  and  just  compensation.  To  fix 
such  rates  and  compensation  is  the  duty,  and  within  the  jurisdiction, 
of  the  board.  To  fix  rates  not  reasonable,  or  compensation  not  just, 
is  a  plain  violation  of  its  duty." 

In  the  case  of  Spring  Valley  Waterworks  v.  Schottler,  110  U.  S. 
347,  4  Sup.  Ct.  48,  Chief  Justice  Waite,  in  speaking  of  the  same 
constitutional  provision,  said : 

"  By  the  constitution,  and  the  legislation  under  it,  the  municipal 
authorities  have  been  created  a  special  tribunal  to  determine  what, 
as  between  the  public  and  the  company,  shall  be  deemed  a  reason- 
able price  during  a  certain  limited  period.  Like  every  other  tri- 
bunal established  by  the  legislature  for  such  a  purpose,  their  duties 
are  judicial  in  their  nature,  and  they  are  bound,  in  morals  and  in 
law,  to  exercise  an  honest  judgment  as  to  all  matters  submitted  for 
their  official  determination." 

The  court  further  observed  that  it  was  not  necessary,  in  that  case, 
to  determine  "what  may  be  done  if  the  municipal  authorities  do 
not  exercise  an  honest  judgment,  or  if  they  fix  upon  a  price  which 
is  manifestly  unreasonable." 

It  is  obvious,  I  think,  that  it  must  be  held,  either  that  the  right 
of  judicial  interference  exists  only  when  the  schedule  of  rates  estab- 
lished will  fail  to  secure  the  owners  of  the  property  some  compensa- 
tion or  income  from  their  investment  (however  small),  or  else  that 
the  court  must  adjudicate,  when  properly  called  upon  to  do  so, 
whether  the  rates  established  by  the  municipal  authorities  are  so 


296  RATES.  [chap.  IV. 

manifestly  unreasonable  as  to  amount  to  the  taking  of  property 
for  public  use  without  just  compensation.  Undoubtedly,  every  in- 
tendment is  in  favor  of  the  rates  as  established  by  the  municipal 
authorities.  But  as  it  is  firmly  established  that  it  is  within  the 
scope  of  judicial  power,  and  a  part  of  judicial  duty,  to  inquire 
whether  rates  so  established  operate  to  deprive  the  owner  of  his 
property  without  just  compensation,  it  seems  to  me  that  it  logically 
follows  that,  if  the  court  finds  from  the  evidence  produced  that 
they  are  manifestly  unreasonable,  it  is  its  duty  so  to  adjudge,  and 
to  annul  them;  for  it  is  plain  that  if  they  are  manifestly  unrea- 
sonable they  cannot  be  just.  In  the  solution  of  that  problem  many 
considerations  may  enter;  among  them,  the  amount  of  money 
actually  invested.  But  that  is  by  no  means,  of  itself,  controlling, 
even  where  the  property  was  at  the  time  fairly  worth  what  it  cost. 
If  it  has  since  enhanced  in  value,  those  who  invested  tlieir  money 
in  it,  like  others  who  invest  their  money  in  any  other  kind  of 
property,  are  justly  entitled  to  the  benefit  of  the  increased  value. 
If,  on  the  other  hand,  the  property  has  decreased  in  value,  it  is 
but  right  that  those  who  invested  their  money  in  it,  and  took  the 
chances  of  an  increase  in  value,  should  bear  the  burden  of  the  de- 
crease.' i^In  my  judgment,  it  is  the  actual  value  of  the  property  at 
the  time  the  rates  are  to  be  fixed  that  should  form  the  basis  upon 
which  to  compute  just  rates;  having,  at  the  same  time,  due  regard 
to  the  rights  of  the  public,  and  to  the  cost  of  maintenance  of  the 
plant,  and  its  depreciation  by  reason  of  wear  and  tear.  If  one  has 
property  to  sell,  it  is  its  present  value  that  is  looked  to,  one  element 
of  which  may  very  properly  be  its  cost ;  but  one  element  only.  So, 
too,  if  one  has  property  to  lease,  it  is  its  present  value,  rather  than 
its  cost,  upon  which  the  amount  of  rent  is  based.  And  if,  as  said  by 
Mr.  Justice  Brewer  in  Ames  v.  Eailway  Co.,  supra,  the  public  were 
seeking  to  condemn  the  property  in  question  for  a  greater  public 
use,  if  that  be  possible,  its  present  value,  and  not  its  cost,  is  that 
which  the  public  would  have  to  pay.  !^It  follows,  I  think,  that,  where 
the  public  undertakes  to  reduce  the  rates  to  be  charged  for  the  use 
of  such  property,  it  is  its  present  value,  and  not  its  cost,  that  must 
be  taken  as  a  basis  upon  which  to  fix  reasonable  and  just  rates; 
having  due  regard  to  the  cost  of  its  maintenance,  to  its  depreciation 
by  reason  of  wear  and  tear,  and  also  to  the  rights  of  the  public. 
If,  upon  such  a  basis,  a  fair  interest  is  allowed,  no  just  cause  of 
complaint  can  exist.^ 

2  "  If  the  State  were  to  seek  to  acquire  the  title  to  these  roads,  under  its 
power  of  eminent  domain,  is  there  any  doubt  that  constitutional  provisions 
would  require  the  payment  to  the  corporation  of  just  compensation,  that 
compensation  being  the  value  of  the  property  as  it  stood  in  the  markets  of 
the  world,  and  not  as  prescribed  by  an  act  of  the  legislature?  Is  it  any  less 
a  departure  from  the  obligations  of  justice  to  seek  to  take  not  the  title  but 


SEC.   v.]  THE   CAPITAL.  297 

SMYTH  V.  AMES. 

169  U.  S.  466.     1898. 

Supra,  p.  243.1 


LOUISVILLE  AXD  NASHA^LLE  EAILEOAD  CO.  v.  RAIL- 
ROAD COMMISSION  OF  ALABAMA. 

196  Fed.  800.     1912. ^ 

Jones,  District  Judge.  In  reference  to  the  question  of  value 
with  the  view  of  rate  regulation,  the  most  reliable  test  ordinarily 
is  the  cost  of  the  reproduction  of  the  road  as  it  exists.  I  say 
"ordinarily"  because  there  may  be  instances,  which  is  not  the 
case  here,  where  by  reason  of  paralleling  the  road  by  a  new  road, 
and  diverting  its  business  or  from  other  causes,  its  value  may  be 
far  less  than  what  it  will  cost  to  reproduce  it  as  it  is  at  the  time 
of  the  inquiry.  The  original  cost  of  a  road  may  in  some  cases 
reflect  light  on,  or  even  determine,  the  present  value,  as  when 
it  is  of  very  recent  construction.  But  ordinarily  it  is  of  little 
assistance  in  that  regard,  since  many  items  of  value  may  be  dona- 
tions by  the  government  or  by  individuals,  as  is  the  case  of  the 
south  and  north,  or  the  road  may  have  been  built  long  before  the 

the  use  for  the  public  benefit  at  less  than  its  market  value?"     Mr.  Justice 
Brewer,  in  Reagan  v.  Farmers'  L.  &  T.  Co.   (1894),  154  U.  S.  362,  410. 

"  The  judicial  test  of  market  value  depends  upon  the  fact  that  sales  of 
similar  property  have  been  and  are  being  made  at  ascertainable  prices.  But 
such  property  as  this  is  not  so  sold,  at  least,  not  often  enough  to  furnish 
a  fair  criterion:  and  the  very  fact  of  governmental  regulation  would  neces- 
sarily control  the  price.  Until  the  rates  are  fixed  no  one  can  say  how  much 
the  property  would  sell  for,  and  therefore  that  price  cannot  be  ascertained 
as  a  basis  for  fixing  those  rates."  Van  Fleet,  J.,  in  San  Diego  Water  Co.  v. 
San  Diego  (1897),  118  Calif.  556,  568. 

1  "  The  master  found  the  value  of  the  entire  railroad  to  be  $93,385,341.32, 
this  estimate  of  the  value  of  the  railroad  being  based,  as  has  been  stated, 
on  the  amount  of  outstanding  stock  and  bonds.  Clearly  this  method  of 
reaching  the  value  of  the  railroad  was  unsatisfactory,  and  does  not  comply 
with  the  rule  laid  down  in  Smyth  v.  Ames,  supra.  _  ,  .     ^u 

"  We  think  it  unnecessary  to  consider  some  other  questions  discussed  in  the 
case  because  the  judgment  of  the  Circuit  Court  was  evidently  based  upon 
the  matters  which  have  been  referred  to  above;  that  is  (1)  the  manifest 
error  of  the  master  in  failing  to  allow  any  presumption  in  favor  of  the 
correctness  of  the  commission's  action.  (2)  the  failure  on  the  part  of  the 
railway  company  to  show  the  cost  of  service  in  handling  the  particular  com- 
modity involved  here,  and  (3)  the  action  of  the  master  in  basing  the  value 
of  the  railway  company's  property  in  Louisiana  on  the  amount  of  stock 
and  bonds  outstanding  and  therein  failing  to  comply  with  the  rule  announced 
by  the  Supreme  Court  as  to  what  should  be  considered  in  reaching  the  fair 
value  of  railroad  property."  Newman,  .7.,  in  Texas  &  P.  Ry.  Co.  r.  R.  R. 
Com.  of  La.  (1911),  192  Fed.  280.  286.  See  Steenerson  v.  Great  N.Ry- 
Co  (1897>.  69  Minn.  .353.  373:  Fuhrman  v.  Buffalo  G.  E.  Co.  (1913).  3 
P.  S.  C,  2d  D.  of  N.  Y.  739,  767. 

1  The  statement  of  facts  and  a  large  part  of  the  opinion  are  omitted. —  Ed. 


298 


KATES.  [chap.    IV. 


period  of  inquiry  at  greatly  less  or  greatly  higher  prices  than  those 
prevailing  at  the  time  of  the  inquiry.  Or  its  original  cost  might 
be  involved  in  obscurity,  and  may  include  the  cost  of  abandoned 
or  destroyed  portions  of  the  property,  which  should  not  figure  in 
the  inventory  for  the  present  time,  or  the  road  may  have  been 
bought  at  a  forced  sale  in  times  of  panic  at  a  nominal  price  or 
in  inflated  times  at  a  corresponding  price ;  or  the  road,  costing  little 
originally,  may  have  developed  from  many  contributing  causes  into 
being  property  of  great  value.  And  in  every  case,  after  finding 
the  original  cost,  when  possible  to  be  done,  the  question  would  still 
have  to  be  solved  as  to  whether  such  original  cost  is  the  same  as 
the  present  value,  which  would  involve  the  determination  of 
the  present  value  fer  such  comparison  independent  of  original  cost, 
and  in  no  other  or  better  way  than  on  reproduction  values. 

The  market  value  of  bonds  and  stocks,  while  shedding  in  some 
cases  light  on  the  question  of  present  value,  cannot  except  in  a  very 
slight  measure  indicate  what  that  value  is  as  a  matter  of  fact.  The 
market  value  of  stocks  and  bonds  merely  shows  the  public  estimate 
of  the  value  of  the  whole  property  contributing  to  the  income, 
which  may,  as  in  the  case  of  the  Louisville  &  Nashville  Eailroad, 
embrace  millions  of  dollars  of  property  not  used  as  a  common 
carrier.  And  this  public  opinion  is  also  open  to  the  influences 
of  stock  jobbing  manipulation  and  artificial  bookkeeping,  without 
the  advantages  of  sworn  inventories  and  the  precise  testimony  of 
competent  and  disinterested  witnesses  on  exact  inventories  of  exist- 
ing property.  A  road  may  have  a  small  amount  of  stock  com- 
pared to  its  property,  as  in  the  case  of  the  Louisville  &  Nashville 
Eailroad,  and  it  may  have  no  bonds  or  a  large  amount  of  bonds 
against  its  property  and  the  two  combined  may  not,  with  premiums 
or  discounts  taken  into  consideration,  indicate  with  any  accuracy 
the  present  values  of  the  property  invested  in  the  business  and  used 
as  a  common  carrier.  Therefore,  while  looking  at  all  collateral 
matters  reflecting  light  on  the  subject,  the  court  regards  the  repro- 
duction cost  as  the  final  test  of  present  value. 

Under  inquiry  18  in  the  South  &  North  Case  the  special  master 
reports  at  page  73  et.  seq.  the  cost  of  reproducing  the  railroad  and 
other  properties,  after  deducting  $338,419  from  complainants'  fig- 
ures, for  the  years  named,  as  follows : 

Year  ending  June  30,  1906 $30,041,714.84 

Year  ending  June  30,  1907 31,077,310.17 

Year  ending  June  30,  1908 33,077,003.13 

Year  ending  June  30,  1909 33,151,800.36 

Year  ending  June  30,  1910 33,373,753.37 


SEC.   v.]  THE   CAPITAL.  299 

Under  the  same  special  inquiry  18  at  page  112  et  seq.,  in  the 
Louisville  &  Nashville  Case,  the  master  reports  the  cost  of  repro- 
ducing the  railroad  and  other  properties,  including  equipment  used 
as  a  common  carrier,  after  making  deductions  from  complainants' 
estimates  of  $674,673.93,  for  the  years  named,  as  follows : 

Year  ending  June  30,  1906 $41,258,565.60 

Year  ending  June  30,  1907 43,039,940.60 

Year  ending  June  30,  1908 40,800,349.23 

Year  ending  June  30,  1909 41,194,743.68 

Year  ending  June  30,  1910 41,443,463.39 

The  respondents  urged  before  the  master  all  the  objections  now- 
set  up  in  the  exceptions  filed  to  his  reports  as  to  these  values,  and 
they  were  noticed  seriatim,  discussed,  and  disposed  of  by  the  master 
as  shown  in  his  reports.  After  considering  the  exceptions,  I  ap- 
prove and  confirm  the  findings  of  the  master  on  the  questions  of 
values  and  cost  of  reproduction,  and  overrule  the  exceptions  in 
that  regard  of  respondents  and  complainants,  and  approve  and  con- 
firm the  master's  reports  thereon. 

One  of  the  objections  of  the  respondents  is  that  the  estimates  were 
based  on  the  prices  of  1907  when  they  were  made,  and  that  they 
were  then  unusually  high.  This  is  disposed  of  by  the  point  that 
present  values  are  required  to  be  taken  and  used  in  determining 
present  and  prospective  rates.  Cotting  v.  Kansas,  183  U.  S. 
91,  23  Sup.  Ct.  30,  46  L.  Ed.  93;  Wilcox  v.  Consolidated  Gas  Co., 
313  U.  S.  19-53,  39  Sup.  Ct.  192,  53  L.  Ed.  383,  15  Ann.  Cas. 
1034;  Stanislaus  County  v.  J.  C.  &  I.  Co.,  192  U.  S.  215,  24  Sup. 
Ct.  241,  48  L.  Ed.  406.  And  by  the  fact  that  the  proof  satisfac- 
torily shows  that  the  reconstruction  could  not  have  been  effected 
from  1907  to  1910  at  less  than  the  estimates  used.  Eecord,  S.  & 
N.  A.  116,  118,  368,  417,  430,  432,  497,  501;  Eecord,  L.  &  N., 
365-367. 

It  is  insisted  that  in  reproduction  estimates  the  enhanced  value 
of  property  between  the  time  of  the  original  location  of  a  railroad 
through  a  wilderness  or  marsh,  it  may  be,  is  not  to  be  taken  into 
account  40  or  50  years  afterwards,  when  civilization,  perhaps 
largely  the  result  of  the  expenditures  and  operations  of  the  road, 
has  increased  original  values  a  hundredfold.  Suppose  a  road  is 
located  when  original  cost  is  fabulously  inflated,  and  the  course  of 
events  brings  '  things  down  to  their  intrinsic  worth,  upon  whom 
does  the  loss  fall?  It  is  usually  understood  that  the  state  does 
not  make  up  such  losses  to  its  citizens.  And,  vice  versa,  when 
minerals  are  discovered,  or  oil  wells  developed  on  lands,  does  not 


300  RATES.  [chap.   IV. 

the  owner  of  the  land  own  its  product?  And  how  are  tax  values 
estimated?  Do  the  officers  take  the  value  when  land  is  first  en- 
tered and  cleared  or  when  it  has  been  improved  and  become  a  town 
site?  The  law  is  perfectly  settled,  with  the  obvious  view  of  the 
matter,  that  increments  and  losses  alike  attach  to  ownership  as  to 
duties  and  rights  pertaining  to  property.  Willcox  v.  Con.  Gas  Co., 
212  U.  S.  52,  29  Sup.  Ct.  192,  53  L.  Ed.  382 ;  Stanislaus  v.  Irri- 
gation Co.,  192  U.  S.  215,  24  Sup.  Ct.  241,  48  L.  Ed.  406;  San 
Diego  Land  Co.  v.  National  City,  174  U.  S.  757,  19  Sup.  Ct.  804, 
43  L.  Ed.  1154.  And  this  just  rule  has  its  balances  and  adjust- 
ments making  it  not  oppressive  to  the  public  in  any  case.  It  is  to 
be  noticed,  too,  that  the  rates  in  fact  usually  diminish  with  the 
increase  in  property  values,  because  the  increase  of  business  domi- 
nates values  and  justifies  lower  rates;  but,  be  that  as  it  may,  the 
rule  of  giving  to  the  owner  the  increments  of  value  and  subjecting 
him  to  the  losses  in  values  has  the  unequivocal  sanction  of  the  law. 

The  respondents  except  to  the  value  of  the  franchise  in  the 
Louisville  &  Nashville  Case  on  the  ground  that  there  is  no  evidence 
of  the  value  in  the  record.  Exception  10,  L.  &  N.  Case.  And 
in  the  South  &  North  Case,  on  the  ground  that  "  the  valuations 
are  erroneous  and  excessive."     Exception  4,  South  &  North  Case. 

As  to  the  amount  of  valuation,  the  undisputed  proof  is  that  it 
is  the  tax  valuation  at  60  per  cent,  of  real  value  brought  up  to 
par  or  100  per  cent.  This  could  not  be  excessive  if  the  tax  value 
was  60  per  cent,  of  the  real  value,  and  the  uncontradicted  proof  is 
to  that  effect,  and  the  proof  is  that  it  is  not  excessive.  As  to  the 
factum  of  evidence  being  in  the  record  of  the  value,  it  is  shown 
that  the  law  charged  the  State  Tax  Commission  with  the  duty  of 
assessing  the  franchise  for  taxation,  and  they  did  so  and  fixed  the 
value  at  60  per  cent,  of  the  real  value,  and  it  is  shown  what  these 
assessments  were.  Record,  L.  &  N.  Case,  1927,  1928-1960;  Eecord, 
S.  &  N.  Case,  1389,  1400,  1598,  1599,  2622-2627,  2628,  2629, 
2644-2648. 

The  assessments  relied  on  were  state  valuations  by  officers  spe- 
cially delegated  to  make  them,  and  not  merely  to  receive  the  returns 
of  the  taxpayer.  They  are  therefore  competent  evidence  of  pro- 
bative worth.  Wigmore  on  Evid.  §  1640;  Elliott  on  Evidence,  § 
1312;  Eonkendorff  v.  Taylor,  4  Pet.  349,  7  L.  Ed.  882.  (As  to  the 
propriety  of  valuing  the  franchise  on  a  rate  question,  the  authorities 
clearly  settle  the  point  in  the  affirmative."^  I  refer  to  the  master's 
report  in  the  South  &  North  Case,  pp.  41-46,  where  he  considers 
the  question  in  an  able  manner,  and  I  concur  thoroughly  in  his 
conclusion.  I  merely  cite  here  the  authorities.  Willcox  v.  Con. 
Gas  Co.,  212  U.  S.  19-54,  29  Sup.  Ct.  192,  53  L.  Ed.  382,  15  Ann. 


SEC.    v.]  THE   CAPITAL.  301 

Cas.  1034;  Monongaliela  v.  United  States,  148  U.  S.  321,  13  Sup. 
Ct.  623,  37  L.  Ed.  463;  People  v.  O'Brien,  111  N.  Y.  1,  18  N.  E. 
693,  3  L.  E.  A.  355,  7  Ann.  St.  Rep.  684;  Topsham  v.  Maine  W. 
Co.,  99  Me.  371,  59  Atl.  537;  State  Eailroad  Tax  Cases,  93  U.  S. 
606-607,  33  L.  Ed.  663 ;  Waterworks  Co.  v.  Kansas  City,  63  Fed. 
863,  10  C.  C.  A.  653,  37  L.  E.  A.  837;  Metropolitan  T.  Co.  v. 
H.  &  T.  Co.,  etc.  (C.  C.)  90  Fed.  683-689;  Adams  Express  Com- 
pany V.  Kentucky,  166  U.  S.  171,  17  Sup.  Ct.  537,  41  L.  Ed.  960; 
Fargo  V.  Hart,  193  U.  S.  490,  34  Sup.  Ct.  498,  48  L.  Ed.  761 ; 
Adams  Express  Company  v.  Ohio,  166  U.  S.  185-331,  17  Sup.  Ct. 
604,  41  L.  Ed.  965;  Beale  and  Wyman  on  R.  E.  Eate  Eegulation, 
§S  368-370.2 


FUHEMANN  v.  BUFFALO  GEJ^EEAL  ELECTEIC  CO. 

3  P.  S.  C,  2d  D.  of  N.  Y.  739.     1913.^ 

Stevens,  Chairman. 

Value  of  Franchise 

It  is  a  fact  that  the  respondent  has  a  perpetual  franchise  covering 
all  the  streets  and  public  ways  of  the  city  of  Buffalo.  This  fran- 
chise was  acquired  in  the  purchase  from  the  Brush  company  and 
the  Thomson-Houston  company  of  the  fixed  capital  and  franchises 
of  those  companies. 

It  is  not  quite  clear  what  position  the  respondent  takes  concern- 
ing this  franchise,  as  to  whether  it  should  be  treated  as  an  item  of 
property  having  a  value  upon  which  the  company  is  entitled  to  a 
return,  or  not.  At  page  39  of  its  brief  it  indicates  three  possible 
values,  as  follows : 

Eeproduction  value  new,  with  additions,  etc $6,166,140 

Commercial  value 5,948,600 

Net  earnings  value 5,750,000 

In  none  of  these  valuations  does  a  valuation  appear  for  franchise, 
but  upon  pages  39-33  of  its  brief  it  argues  that  the  franchise  has 
value,  and  concludes  as  follows: 

If  it  has  a  value,  or  if  that  value  was  validly  agreed  upon  and 
capitalized  under  the  laws  in  force  when  it  was  done,  such  value 
can  not  by  statute  be  excluded  from  the  total  valuation  upon  which 
a  public  service  corporation  is  entitled  to  a  return. 

2  See  Knoxville  v.  Knoxville  W.  Co.  (1909),  212  U.  S.  1 ;  Minnesota  Rate 
Cases  (1913),  230  U.  S.  352,  4.56  to  4,58;  Buffalo  Gas  Co.  v.  City  of  Buffalo 
(1913),  3  P.  S.  C,  2d  D.  of  N.  Y.  553,  631  to  648. 

1  Only  one  point  from  the  opinion  is  here  reprinted. —  Ed. 


303  RATES.  [chap.    IV. 

In  another  place  in  the  same  brief  the  following  language  is 
used: 

All  three  of  the  bases  for  the  valuation  of  franchises  in  that 
case  are  present  in  this  case,  viz. : 

(a)  The  franchises  were  included  in  the  valuation  in  strict  com- 
pliance with  the  then  existing  laws  of  the  State. 

(h)  The  agreement  under  which  the  franchises  were  included  in 
the  "  aggi'egate  value  "  of  the  properties,  franchises,  and  rights  con- 
solidated has  always  been  recognized  as  valid;  otherwise  it  must 
be  assumed  that  some  attack  upon  it  would  have  been  made  by 
some  public  authority  during  the  twenty  years  during  which  it 
has  continued. 

(c)  The  stock  has  been  dealt  in  for  more  than  twenty  years  on  the 
basis  of  its  validity ;  and  to  declare  the  basis  of  it  invalid  after  such 
a  lapse  of  time  would  be  to  do  great  injury  to  innocent  investors 
who  have  relied  and  had  the  right  to  rely  upon  the  validity  of  an 
issue  of  stock  made  strictly  in  accordance  with  the  law. 

It  must  be  assumed  from  the  foregoing  language  that  the  re- 
spondent expects  that  some  franchise  value  must  be  allowed  it  in 
fixing  the  rate.  It  recognizes  that  the  stock  and  bonds  which  were 
issued  to  the  Thomson-Houston  and  Brush  companies  amounted 
to  $3,000,000 ;  that  the  physical  property  had  a  value  of  practically 
$1,100,000,  thus  leaving  $1,900,000  to  be  accounted  for  in  in- 
tangibles of  some  character. 

The  respondent  has  made  no  proof  whatsoever  regarding  this  al- 
leged franchise  value,  but  if  it  claims  any  return  thereon  it  relies 
wholly  upon  the  argument  presented  in  its  brief. 

It  is  true  that  a  great  deal  has  been  said  about  franchise  value  in 
ratecases.  It  is  unnecessary  at  this  time  to  review  what  has  been 
said.  There  is  one  paramount  fundamental  consideration  which,  in 
the  judgment  of  the  Commission,  is  conclusive  upon  the  whole 
matter,  and  the  facts  upon  which  it  is  based  are  as  follows : 

It  does  not  appear  that  any  sum  whatever  was  ever  paid  by  the 
respondent  or  by  its  predecessor  companies  for  this  franchise.  It 
was  a  gift  by  the  City  of  Buffalo  to  the  predecessor  companies,  and 
consists  wholly  in  permission  to  use  the  streets  of  the  city  for  the 
placing  of  poles,  stringing  of  wires,  and  placing  of  conduits.  The 
company  was  given  this  privilege,  without  which  it  could  not  tran- 
sact its  business.  It  is  true  that  the  franchise  is  of  value  to  the 
company,  and  that  without  the  franchise  the  remainder  of  its  prop- 
erty would  not  possess  any  exchange  value  as  an  electric  plant, 
or  such  as  might  be  given  it  when  coupled  with  the  expectation  that 
a  franchise  would  be  given.     If  it  were  entirely  certain  that  no 


SEC.   v.]  THE   CAPITAL.  303 

franchise  would  be  given,  the  property  would  have  no  exchange  value 
except  for  purposes  other  than  the  distribution  of  electric  energy. 
The  franchise  gives  life  to  the  enterprise  and  makes  possible  a  re- 
turn upon  the  capital  which  has  been  sunk  in  it.  It  makes  possible 
a  sale  of  the  concern  to  other  investors  if  those  constructing  it  desire 
to  part  with  their  interest.  It  is  indispensable  to  the  conduct  of 
the  enterprise.  All  of  these  considerations,  however,  entirely  fail 
to  show  that  the  public  should  pay  a  return  upon  some  amount 
assumed  to  be  the  value  of  the  franchise.  The  investors  did  not  put 
the  franchise  into  the  enterprise.     That  was  done  by  the  public. 

The  whole  truth  lies  in  one  sentence :  'Tf  the  franchise,  which  was 
a  gift  from  the  public  to  the  company,  should  be  made  the  basis  of 
a  money  return,  the  practical  result  would  be  that  the  public  would 
have  to  pay  money  to  the  company  because  it  had  given  the  company 
tlie  right  to  occupy  the  public  streets  with  its  plant.")  This  is  the 
Avhole  of  the  matter,  and  when  thus  stated,  there  is  But  little  more 
to  be  said. 

The  City  of  Buffalo  as  a  municipality  has  given  the  company 
a  right  to  place  its  poles  and  string  its  wires  in  the  streets  for  the 
purpose  of  lighting  the  streets.  The  argument  that  the  franchise 
thus  given  has  a  value  for  rate  making  purposes  comes  just  to  this: 
tliat  the  City  must  annually  pay  to  the  company,  in  addition  to  all 
just  amounts  for  operating  expenses,  taxes,  amortization,  and  a 
proper  return  upon  the  investment  made  by  the  stockholders,  a  fur- 
ther sum  because  of  the  right  which  the  City  itself  had  given 
to  occupy  its  streets.  The  company  desires  to  make  money  by 
lighting  the  streets.  It  can  not  so  do  without  having  its  plant 
in  the  streets.  The  City  consents  that  the  plant  may  be  put  in  the 
streets,  and  the  company  then  desires  the  City  to  pay  it  a  large 
sum  because  it  has  consented  to  such  use  of  the  streets.  If  the  fran- 
chise was  of  the  value  of  $3,000,000,  as  seems  to  have  been  assumed 
in  the  consolidation,  and  the  proper  return  upon  this  is  6  per  cent, 
per  annum,  the  public  in  the  City  of  Buffalo  would  be  required 
to  pay  $120,000  each  year  to  the  respondent  for  no  reason  whatso- 
ever except  that  it  had  given  the  company  the  right  to  occupy  the 
public  streets  with  its  plant.  We  are  not  prepared  to  say  that 
either  the  municipality  of  Buffalo  or  the  customers  of  the  company 
residing  in  Buffalo  should  pay  anything  to  the  respondent  on  this 
account.^ 

2  Compare  Willcox  v.  Consolidated  Gas  Co.  (1909),  212  U.  S.  19. 


/ 


304  KATES.  |[CHAP.   IV. 


PIONEEE  TELEPHONE  AND  TELEGRAPH  CO.  v. 
WESTENHAYEE. 

29  Okl.  429.     1911.^ 

Hayes,  J.  No  inflexible  method  for  the  ascertainment  of  the 
value  of  the  property  used  in  the  service  has  been  fixed  by  legislative 
bodies  dealing  with  rates,  or  by  the  courts  in  determining  the  validity 
of  rates,  and  from  the  nature  of  the  subject  no  inflexible  method  can 
be  fljced.  Sometimes  the  present  value  is  arrived  at  by  ascertaining 
the  original  cost  of  construction  and  all  betterments,  and  deducting 
therefrom  for  depreciation;  but  this  method  does  not  always  prove 
to  be  fair  and  just.  If  there  was  extravagance  and  unnecessary 
waste  in  the  construction,  or,  as  is  often  the  case,  fictitious  stocks 
and  bonds  issued,  the  proceeds  of  which  did  not  go  into  the  original 
construction,  such  method  would  prove  unfair  to  the  public.  On 
the  other  hand,  where  the  market  price  of  the  physical  units  or  of 
the  labor  entering  into  the  construction  of  the  plant  has  advanced 
since  its  construction,  the  original  cost  may  be  much  lower  than 
the  present  value,  and  for  that  reason  be  to  the  owner  of  the  plant 
an  unfair  determination  of  its  present  value.  'The  method  most 
frequently  used  is  to  ascertain  what  it  will  cost  to  reproduce  the 
plant,  or  the  cost  of  its  replacement  at  the  present  time,  and  de- 
duct therefrom  for  depreciation  in  the  existing  plant.^  Both  meth- 
ods may  be  used  and  considered  in  ascertaining  the  present  value, 
and  both  are  often  resorted  to,  as  was  done  in  this  case. 

By  appellant's  evidence,  it  is  established  that  appellant  has  not 
owned  the  exchange  plant  at  Enid  from  its  construction,  but 
that  it  acquired  the  plant,  in  1905,  from  others,  and  paid  therefor 
the  sum  of  $54,000,  which  was  the  amount  the  plant  had  cost  those 
who  had  constructed  it.  Appellant,  immediately  after  purchasing 
the  plant,  began  reconstructing  it  and  enlarging  its  equipment.  It 
expended  for  these  purposes,  during  the  year  1905,  the  sum  of 
$17,115.78;  during  the  year  1906,  $52,177.47;  during  the  year  1907, 
$12,395.76.  None  of  said  expenditures  was  made  for  land,  build- 
ing, rights  of  way,  franchises,  or  other  privileges.  The  total  cost 
of  the  plant  to  appellant  at  the  time  of  the  first  hearing  in  February, 
1908,  exclusive  of  lands  and  buildings,  was  $135,689.01.  The 
Commission  undertook  to  ascertain  the  present  value  by  finding  the 
reproductive  value  new,  or  cost  of  replacement.  This  method  is 
practicable  for  a  telephone  exchange  plant,  and  is  probably  as  fair 
and  accurate  a  method  as  could  have  been  adopted  in  the  present 

1  Part  of  the  opinion  is  omitted. —  Ed, 


SEC.    v.]  THE   CAPITAL.  305 

case.  In  pursuance  of  this  method,  a  Mr.  Player,  a  telephone  expert 
for  the  Commission,  was  sent  with  assistants  to  Enid  to  take  in- 
ventory of  the  plant,  and  appraise  its  reproductive  value  or  cost  of 
replacement.  The  summary  of  his  appraisement,  corrected  in  ac- 
cordance with  admissions  at  the  trial,  is  as  follows: 


1.  Interior  equipment  local  exchange $20,503.39 

2.  Subscribers'  stations 19,984.53 

3.  Aerial  construction 29,634.50 

4.  Underground  construction 11,371.22 


5.  Eeplacement  cost  of  the  physical  property  after  add- 

ing the  cost  of  jumper  wires  and  transmitters  and 
receivers 81,493.64 

6.  Engineering  and  supervision,  10  per  cent 8,149.37 

7.  Total  replacement  cost  of  physical  property  on  a  con- 

tract basis 89,643.01 

8.  Office  fixtures  and  furniture    1,473.75 

9.  Stock  on  hand  —  material 2,433.56 

10.  Stock  on  hand  —  tools 153.37 

11.  Eolling  stock  and  live  stock 960.00 


$94,663.69 


The  Commission  adopted  and  found  the  foregoing  appraisement 
to  be  the  present  value  of  the  plant,  and  that  the  amount  upon  which 
appellant  is  entitled  to  receive  a  fair  return  is  $94,663.69.  Appel- 
lant accepts  in  this  proceeding  all  the  items  in  the  foregoing  ap- 
praisement as  correct,  but  contends  that  there  are  certain  elements 
entering  into  the  reproductive  value  that  the  Commission  has  re- 
fused to  allow.  The  items  for  which  it  contends,  but  which  were 
refused  by  the  Commission,  are  as  follows : 

1.  ]\Iiscellaneous $  2,050.28 

2.  Piecemeal  construction. and  working  around  plant.  .  6,000.00 

3.  Interest  during  construction , 4,000.00 

4.  Working  capital 8,740.06 


$20,790.34  2 


2  The  court  was  satisfied  from  the  evidence  that  the  contract  prices  in  the 
table  of  reproductive  value  included  all  miscellaneous  expenses  and  so  dis- 
allowed the  first  item  contended  for  by  the  company. —  Ed. 


806  EATES.  [chap.    IV. 

The  evidence  upon  whicli  the  appellant  insists  item  No.  2,  refused 
hy  the  Commission,  should  have  been  allowed  is  substantially  as  fol- 
lows, quoting  from  one  of  witnesses : 

"  The  necessity  of  concentrating  the  large  number  of  wires  re- 
quired of  the  larger  city  of  Enid  makes  it  advisable  to  adopt  a 
different  distribution  or  arrangement  of  pole  lines.  This  involved 
the  moving  of  some  of  the  old  poles  in  the  lines,  in  order  to 
shorten  up  spans  to  get  sufficient  strength  for  carrying  the  larger 
cables.  The  moving  of  the  poles  is  an  expensive  undertaking,  as 
same  must  be  moved  without  crossing  up  or  interfering  with  the 
wires  then  being  used  in  the  old  plant.  In  a  great  many  instances, 
new  leads  crossed  old  leads  in  such  a  way  that  extra  work  had  to  be 
done  to  prevent  the  new  work  from  interfering  with  the  operation  of 
the  old  plant.  The  subscribers'  instruments  had  to  be  rewired  and 
adapted  to  work  temporarily  on  the  new  plant  until  final  changes 
should  be  made.  In  fact,  there  was  no  part  of  the  new  work  that 
did  not  have  to  be  worked  out  with  some  special  regard  to  the  pro- 
tection of  the  old  plant,  in  order  that  service  might  be  continued." 

We  think,  however,  that  the  Commission  committed  no  error  in 
refusing  to  allow  this  item.  The  fact  that  appellant's  plant  has  been 
constructed  piecemeal  does  not  increase  its  present  value,  although 
the  cost  of  construction  by  such  method  may  have  been  greater  than 
if  it  had  been  constructed  at  one  time.''  The  plant,  in  our  opinion, 
in  arriving  at  its  cost  of  reproduction  new,  should  not  be  considered 
as  an  existing  obstruction  upon  the  streets,  which  would  have  to  be 
worked  around  in  constructing  a  new  plant  of  a  similar  kind.  The 
fact  that  other  obstructions,  such  as  telegraph  systems  or  other  tele- 
phone plants,  exist  in  the  streets  at  the  present  time,  and  would  have 
to  be  worked  around  at  this  time  in  building  a  plant  like  appellant's, 
might  require  an  allowance  in  arriving  at  the  cost  of  reproduction 
new  of  appellant's  plant ;  but  a  determination  of  that  question  is  not 
required  here,  for  it  is  not  for  such  obstruction  that  this  item  is 
claimed.^ 

Item  Ko.  3  disallowed  by  the  Commission,  is  for  interest  on 
the  capital  invested  during  the  period  of  construction.  There  is 
no  controversy  about  the  amount  of  this  claim.  The  Commission 
refused  to  allow  it,  because  it  did  not  consider  it  a  proper  element 
of  reproductive  value.  Counsel  for  the  Commission,  however,  at 
the  oral  argument  before  this  court,  conceded,  and  we  think  properly, 
that  there  was  no  ground  for  refusing  its  allowance.  It  is  a  matter 
within  the  observation  and  knowledge  of  all  that  a  plant,  the  cost 

3  Compare  State  .Journal  Trinting  Co.  v.  Madison  G.  &  EI.  Co.  (1910), 
4  Wis.  K.  C.  R.  .'lOl,  54G;  City  of  Ripon  v.  Ripon  L.  &  W.  Co.  (1910),  5 
Wis.  R.  C.  R.  1,  15. 


SEC.    v.]  THE    CAPITAL.  307 

of  whose  physical  units  put  together  into  a  completed  plant  ap- 
proximates $100,000,  cannot  be  constructed  instantly.     It  requires 
time  to  assemble  the  physical  properties,  and  still  a  greater  length 
of  time  to  put  those  units  into  place,  where  they  may  be  used 
to  render  service.     During  this  period,  the  capital  invested  must  of 
necessity  be  idle,  and  no  income  can  be  derived  therefrom.    vWhen 
the  construction  of  tlie  plant  is  completed,  no  willing  seller,  w-ho  is 
not  forced  to  sell,  would  take  for  his  plant  the  cost  of  the  physical 
units  and  the  cost  of  the  labor  in  the  construction,  because  the 
plant  has  cost  him  in  addition  thereto  the  use  of  the  capital,  or  a 
certain  part  thereof,  invested  in  the  physical  properties  during  the 
time  of  construction.  ')A  willing  buyer  could  afford  to  pay,  and 
would  pay,  more  than  the  actual  cost  of  labor  and  material,  assum- 
ing that  the  plant  has  been  economically  constructed,  because  such 
cost  would  not  represent  the  total  expenditures  the  purchaser  would 
have  to  make,  in  order  to  construct  the  plant  himself.     In  addi- 
tion to  such  expenditures,  he  would  have  to  expend  the  earnings  of 
his  capital  during  the  period  of  construction.     No  case  has  been 
cited,  and  in  our  investigation  we  have  found  no  case,  involving  this 
question,  where  a  reasonable  amount  has  not  been  considered  and 
allowed  for  loss  of  interest  during  construction  as  part  of  the  cost  of 
construction.* 

In  addition  to  the  foregoing  items  disallowed  by  the  Commis- 
sion, and  the  items  allowed  as  constituting  the  fixed  capital  of  the 
company,  appellant  contends  for  an  allowance  of  item  No.  4,  as 
working  capital,  on  which,  also,  it  is  entitled  to  receive  a  fair 
return.  The  Commission  allowed  the  sum  of  $2,433.56  for  stock 
on  hand  at  Enid.  Item  No.  9  of  Mr.  Player's  appraisal  shows  that 
sum  to  be  the  amount  of  stock  and  supplies  on  hand  at  Enid  at 
the  time  he  appraised  the  plant.  Appellant  maintains  a  general 
office  at  Oklahoma  City,  where  are  kept  tools  and  teams,  stock 
on  hand  in  the  general  storehouse,  a  repair  shop,  cash  to  meet 
the  current  expenses  of  its  plants  and  system  throughout  the  state, 
and  general  office  fixtures  that  are  used  by  the  general  officers  of 

4  "  Included  in  plaintifE's  estimate  of  value  are :  Interest  on  capital  dur- 
ing construction.  .$22,41.5;  promotion  and  organization,  $14,943.69;  and  en- 
gineering, .$18.(;79.(il.  These  are  mere  estimates  of  what  might  be  expended 
for  these  purposes  in  the  construction  of  a  new  plant.  Of  course,  all  the 
money  required  would  not  necessarily  remain  idle  during  construction,  and 
the  witness  admitted  that  the  only  expense  for  promotion  and  organization 
he  could  think  of  would  be  attorneys'  fees  in  preparing  proper  papers.  Ihe 
expense  for  engineering  was  said  to  be  the  percentage  taken  into  consid- 
eration by  those-  contemplating  such  enterprises.  Manifestly  these  estimates 
are  large'ly  speculative.  Nothing  can  be  allowed  for  the  promotion  and 
organization  of  the  company,  for  it  is  immaterial  by  whom  the  plant  may 
be  owned  in  estimating  its  value."  Ce<lar  Rapids  G.  L.  Co.  v.  V^^ar  R^Pi^^s 
(1909),  144  la.  42G.  438.  Compare  City  of  Kipon  v.  Ripon  L.  &  W.  Co. 
(1910),  5  Wis.  R.  C.  R.  1,  13;  Shepard  v.  N.  Pac.  Ry.  Co.  (1911),  184 
Fed.  7G5,  809. 


308  RATES.  [chap.    IV. 

the  company,  whose  time  is  devoted  to  the  entire  properties  of  the 
company.  Discussing  the  question  of  working  capital,  the  Eailroad 
Commission  of  Wisconsin,  in  Cunningham  v.  Chippewa  Falls  Water 
&  Light  Co.,  5  W.  E.  C.  E.,  302,  said: 

"(Plants  of  this  kind,  the  same  as  practically  all  other  business 
enterprises  must  have  on  hand  a  reasonable  cash  balance  and  other 
current  resources,  in  order  to  operate  economically  and  effectively. 
That  this  is  the  case  is  most  self-evidentj  It  has  been  pointed 
out  in  other  decisions  of  this  Commission,  in  Hill  v.  Antigo  Water 
Co.,  3  W.  E.  C.  E.  633,  631,  and  particularly  in  State  Journal 
et  al.  V.  Madison  Gas  &  Electric  Co.,  4  W.  E.  C.  E.  501,  550. 
Just  what  sum  represents  a  fair  amount  for  working  capital  is 
nearly  always  a  matter  of  judgment,  and  to  this  there  is  no  ex- 
ception in  this  case."  ^ 

The  commission  committed  error  in  refusing  to  allow  anything  on 
items  Nos.  3  and  4,  disallowed,  and  should  have  allowed  $4,000  on 
item  No.  3,  and  $7,249.24  on  item  No.  4,  or  a  total  of  $11,249.24. 
While  the  Commission,  in  disallowing  these  items  in  arriving  at 
the  present  value  of  appellant's  plant,  committed  error  prejudicial  to 
appellant,  such  error,  we  think,  is  offset  by  an  omission  of  the  Com- 
mission which  operates  against  appellees  and  the  public] 

In  finding  the  present  value  of  the  physical  properties  of  the 
plant,  the  Commission  treats  the  reproductive  value  of  such  prop- 
erties new  as  the  present  value.  But  the  physical  properties  of 
this  plant  are  not  new.  Some  parts  of  the  same  have  been  used  for 
several  years.  It  is  true  that  a  large  portion  of  the  same  had  been 
used  only  for  periods  of  one  and  two  years  at  the  time  of 
the  hearing,  but,  as  established  by  appellant's  evidence,  which  we 
shall  consider  later,  every  year  there  is  a  depreciation  in  the  physical 
properties  of  the  plant  that  is  not,  and  cannot  be,  taken  care  of  by 
current  repair,  and,  although  some  of  the  physical  units  have  been 
used  only  for  a  brief  time,  such  use  brings  about  a  depreciation ;  and 
the  reproductive  value  new  of  such  physical  units  represents  the 
present  value  only  when  there  is  deducted  therefrom  the  amount  of 
annual  depreciation.  Knoxville  v.  Knoxville  Water  Co.,  212  U.  S. 
1,  29  Sup.  Ct.  148,  53  L.  Ed.  371. 

All  the  evidence  is  to  the  effect  that  there  is  an  annual  depre- 
ciation of  the  properties  of  a  telephone  plant  of  the  character  of  ap- 
pellant's plant  at  Enid  in  the  approximate  amount  of  7  per  cent, 
per  year  over  what  can  be  taken  care  of  by  current  repairs.  Seven 
per  cent,  of  the  construction  value  of  this  plant  for  the  years  1906, 
1907,  and  1908  makes  a  total  depreciation  in  the  sum  of  $15,410.46. 

5  See  Consolidated  G.  Co.  v.  City  of  N.  Y.  (1907),  157  Fed.  849,  859; 
Mayhew  v.  Kings  County  L.  Co.  (1911),  2  P.  S.  C,  1st  D.  of  N.  Y.  659.  688. 


SEC.   v.]  THE    CAPITAL.  309 

During  the  year  1908,  $1,340.60  was  expended  in  replacing  those 
parts  of  the  plant  so  depreciated  that  they  could  no  longer  be  made 
serviceable  by  repair.  This  amount  should  be  deducted  from  the 
total  depreciation,  which  would  leave  a  net  depreciation  of  $14,- 
069.86.  This  amount  of  depreciation  for  those  three  years,  based 
on  the  estimate  of  7  per  cent,  annual  depreciation  which  the  Com- 
mission failed  to  consider  in  determining  the  reproductive  and  pres- 
ent value  of  the  plant,  exceeds  the  amount  of  said  items  Nos.  3  and 
4,  which  it  refused  to  allow  in  finding  such  value.  Owing  to  the 
fact  that  this  plant  is  in  large  part  new,  the  depreciation  for  the 
said  three  years  would  probably  not  reach  the  annual  average. 
There  is  no  evidence,  however,  as  to  what  the  ratio  of  depreciation 
of  these  three  years  would  be  to  the  average;  but,  since  approxi- 
mately one-third  in  value  of  the  physical  properties  of  the  plant 
consists  of  old  property  existing  in  the  plant  at  the  time  of  pur- 
chase by  appellant,  there  would  be  considerable  depreciation  during 
each  of  said  years ;  and,  from  all  the  facts  in  the  case,  we  think  it  can- 
not be  said  that  the  amount  erroneously  disallowed  by  the  Commis- 
sion is  greater  than  the  element  of  depreciation  which  the  Com- 
mission failed  to  consider.  It  does  not  clearly  appear  that  the 
finding  of  the  Commission  that  $94,663.69,  exclusive  of  going  con- 
cern value,  is  the  present  value  of  the  plant  upon  which  appellant 
is  entitled  to  receive  a  fair  return  is  so  erroneous  that  it  should 
be  disturbed,  and,  exclusive  of  the  element  of  going  concern  value, 
we  adopt  said  sum  as  the  total  value  of  appellant's  property  on 
which  it  is  entitled  to  a  fair  return. 

There  is  no  contention  that  any  value  on  account  of  un- 
expired franchise  or  for  good  will  should  be  added  to  the  repro- 
ductive value,  in  order  to  ascertain  the  present  value ;  but  it  is  con- 
tended that,  by  reason  of  the  fact  that  appellant's  plant  has  an 
established  system  of  operation,  has  at  present  customers  sufficient 
in  number  to  pay  the  operating  expenses  and  annual  depreciation 
and  some  profit,  it  has  a  value  beyond  the  mere  cost  of  reproducing 
the  plant.  This  element  of  value  contended  for  has  been  generally 
referred  to  by  the  authorities  as  "the  going  concern  value"  or 
"going  value."  No  case  from  the  Supreme  Court  of  the  United 
States  involving  the  reasonableness  of  rates  or  charges,  wherein  this 
question  has  been  considered  by  that  court,  has  been  called  to  our 
attention.  In  Knoxville  v.  Knoxville  Water  Co.,  supra,  the  lower 
court  added  to  the  appraisement  of  the  physical  properties  the  sum 
of  $6,000,000  for  going  concern  value.  The  Supreme  Court  as- 
sumed, without  deciding,  that  this  item  was  properly  added.-  There 
are  many  cases  wherein  the  fair  market  value  of  public  service  prop- 
erty was  involved,  under  franchises  reserving  to  the  municipality 


310  RATES.  [chap.   IV. 

the  right  to  purchase  the  plant  at  or  after  a  stipulated  time  for  the 
fair  market  value  thereof.  (These  eases,  so  far  as  we  have  been  able 
to  examine  them,  uniformly  hold  that,  in  the  absence  of  a  provi- 
sion in  the  franchise  to  the  contrary,  the  going  concern  element  o£^ 
value  must  be  considered  in  ascertaining  the  fair  value  of  the  plant/' 

One  of  the  leading  cases  so  holding  is  the  National  Water  Works 
Co.  V.  Kansas  City,  62  Fed.  853,  10  C.  C.  A.  653,  27  L.  E.  A.  827. 
In  that  case  it  was  said  in  the  opinion  by  Mr.  Justice  Brewer: 

"  Nor  would  the  mere  cost  of  reproducing  the  waterworks  plant  be 
a  fair  test,  because  that  does  not  take  into  account  the  value  which 
flows  from  the  established  connections  between  the  pipes  and  the 
buildings  of  the  city.  It  is  obvious  that  the  mere  cost  of  pur- 
chasing the  land,  constructing  the  buildings,  putting  in  the  ma- 
chinery, and  laying  the  pipes  in  the  streets  —  in  other  words,  the 
cost  of  reproduction  —  does  not  give  the  value  of  the  property  as  it 
is  to-day.  A  completed  system  of  waterworks,  such  as  the  company 
has,  without  a  single  connection  between  the  pipes  in  the  streets 
and  the  buildings  of  the  city,  would  be  a  property  of  much  less 
value  than  that  system  connected,  as  it  is,  with  so  many  buildings, 
and  earning,  in  consequence  thereof,  the  money  which  it  does  earn. 
The  fact  that  it  is  a  system  in  operation,  not  only  with  a  capacity 
to  supply  the  city,  but  actually  supplying  many  buildings  in  the 
city,  not  only  with  a  capacity  to  earn,  but  actually  earning,  makes  it 
true  that  '  the  fair  and  equitable  value '  is  something  in  excess  of 
the  cost  of  reproduction.  .  .  .  The  city,  by  this  purchase,  steps  into 
possession  of  a  waterworks  plant,  not  merely  a  completed  system  for 
bringing  water  to  the  city,  and  distributing  it  through  pipes  placed 
in  the  streets,  but  a  system  already  earning  a  large  income  by 
virtue  of  having  secured  connections  between  the  pipes  in  the  streets, 
and  a  multitude  of  private  buildings.  Ut  steps  into  possession  of 
a  property  which  not  only  has  the  ability  to  earn,  but  is  in  fact 
earning.  It  should  pay  therefor,  not  merely  the  value  of  a  system^ 
which  might  be  made  to  earn,  but  that  of  a  system  which  does  earn." 

Other  similar  cases  supporting  this  doctrine,  some  of  which  cite 
the  foregoing  cases,  are:  City  of  Omaha  v.  Omaha  Water  Co., 
218  U.  S.  180,  30  Sup.  Ct.  615,  54  L.  Ed.  991;  Spring  Valley 
Water  Works  v.  City  of  San  Francisco  (C.  C.)  124  Fed.  574; 
Gloucester  Water  Supply  Co.  v.  City  of  Gloucester,  179  Mass. 
365,  60  N.  E.  977;  Kennebec  Water  Dist.  v.  City  of  Waterville, 
97  Me.  185,  54  Atl.  6,  60  L.  E.  A.  856;  Newburyport  Water 
Co.  V.  City  of  Newburyport,  168  Mass.  541,  47  N.  E.  533 ;  Brunswick 
&  T.  Water  Dist.  v.  Maine  Water  Co.,  99  Me.  371,  59  Atl.  537. 

For  the  purpose  of  taxation,  it  is  well  established  that  this  ele- 
ment of  value  must  be  included  in  assessing  the  property.     Galves- 


SEC.   v.]  THE   CAPITAL.  311 

ton,  Harrisburg  &  San  Antonio  Ry.  Co.  v.  State  of  Texas,  210  U. 
S.  217,  28  Sup.  Ct.  638,  52  L.  Ed.  1031;  State  ex  rel.  Foster  v. 
Williams,  123  Wis.  73,  100  N.  W.  1052;  Chicago  &  N.  W.  R.  v. 
State,  128  Wis.  553,  108  N.  W.  557. 

Whether,  however,  all  matters  which  are  considered  in  the  fore- 
going two  classes  of  cases  as  part  of  the  going  value,  for  the  pur- 
poses involved  in  those  cases,  should  be  considered  in  determining' 
the  value  as  a  basis  for  rate  making  is  not  necessary  to  determine 
in  this  case.  It  is  apparent,  however,  that  a  complete  telephone 
plant,  without  a  single  subscriber,  or  with  but  few  subscribers,  is 
less  valuable,  both  to  the  owner  of  the  plant  and  to  the  members 
of  the  public  it  serves,  than  the  same  plant  with  a  larger  patronage. 
The  more  people  a  subscriber  can  communicate  with  over  a  tele- 
phone exchange,  the  more  service,  as  a  general  rule,  is  such  exchange 
to  him;  and  it  is  only  when  such  exchange  has  subscribers  that  the 
property  of  the  owner  invested  therein  has  an  earning  power.  But 
subscribers  are  not  obtained  without  expenditure  of  money,  labor, 
and  time,  during  which  the  capital  invested  in  the  plant  earns 
nothing,  and  often  fails  to  pay  operating  expenses.  The  customers 
must  be  connected  with  the  system  of  the  plant;  trained  employes 
must  be  obtained;  and  a  system  of  operation  must  be  established. 
Few  industries,  if  any,  involving  an  investment  of  $90,000  or  more, 
can  be  made  self-sustaining  from  the  first  day  of  their  operation. 
The  uncontradicted  evidence  in  this  case  discloses  that  appellant's 
plant,  for  the  years  preceding  the  first  hearing,  failed  to  produce 
revenue  sufficient  for  operating  expenses,  current  repair,  and  lay 
aside  an  amount  for  depreciation.  During  the  time  of  development, 
there  is  a  loss  of  money  actually  expended  and  of  dividends  upon 
the  property  invested.  How  shall  this  be  taken  care  of?  Must 
it  be  borne  by  the  owner  of  the  plant  ?  Or  by  the  initial  customers  ? 
COr  shall  it  be  treated  as  part  of  the  investment  or  value  of  the 
plant,  constituting  the  basis  upon  which  charges  shall  be  made 
to  all  customers  who  receive  the  benefits  from  the  increased  service- 
rendering  power  of  the  plant  by  reason  of  these  expenditures?  It 
seems  that  the  last  solution  is  the  logical,  just,  and  correct  one._^ 
If  rates  were  to  be  charged  from  the  beginning,  so  as  to  cover  these 
expenditures,  and  earn  a  dividend  from  the  time  a  plant  is  first 
operated,  the  rate  to  the  first  customers  would  be  in  many  instances, 
if  not  in  all,  so  exorbitant  as  to  be  prohibitive,  and  would  be  so 
at  the  time  when  the  plant  could  be  of  least  service  to  them.  On 
the  other  hand,  the  public  cannot  expect  as  a  business  proposition, 
or  demand  as  a  legal  right,  that  this  loss  shall  be  borne  by  him  who 
furnishes  the  service ;  for  investors  in  public  service  property  make 
such  investments  for  the  return  they  will  yield;  and,  if  the  law 


312  RATES.  [chap.   IV. 

required  that  a  portion  of  the  investments  shall  never  yield  any 
return,  but  shall  be  a  total  loss  to  the  investor,  capital  would  unwill- 
ingly be  placed  into  such  class  of  investments;  but  the  law,  in 
our  opinion,  does  not  so  require.  Private  property  can  no  more 
be  taken  in  this  method  for  public  use  without  compensation,  than 
by  any  other  method.)  When  the  use  of  the  property  and  the  expend- 
itures made  during  the  nonexpense-paying  and  nondividend-paying 
period  of  the  plant  are  treated  as  an  element  of  the  value  of  the 
property  upon  which  fair  returns  shall  be  allowed,  then  the  burden 
is  distributed  among  those  who  receive  the  benefits  of  the  expendi- 
tures and  the  use  of  the  property  in  its  enhanced  value. 

Discussing  this  question,  the  Railroad  Commission  of  Wisconsin, 
in  Geo.  W.  Hill  et  al.  v.  Antigo  Water  Co.,  decided  August  3,  1909, 
said: 

"With  respect  to  the  value  of  the  plant,  it  was  found  that 
for  the  purposes  of  this  case,  and  under  the  conditions  that  prevail, 
the  investors  in  the  plant  and  those  who  carry  on  its  business  are 
equitably  entitled  to  reasonable  returns  for  interest  and  profits 
on  a  valuation  that  fairly  represents  the  legitimate  and  necessary 
costs  of  constructing  the  plant  and  of  building  up  its  business. 
The  valuation  which  is  thus  made  the  basis  for  the  earning  of  the 
rates  should  also  be  a  valuation  that  is  subject  to  the  fewest  fluc- 
tuations. Such  a  valuation  as  this  appears  to  be  equitable  to  the 
investors  and  those  who  carry  on  the  business,  on  the  one  hand, 
and  to  the  customers  of  the  plant,  on  the  other,  It  also  furnishes  a 
basis  upon  which  rates  may  be  fixed  that  are  reasonable  and  just  to 
all  concerned,  and  that  also  have  such  stability  as  is  required  by 
the  best  interests  of  those  affected." 

Although  that  body  is  not  one  of  last  resort  for  the  determination 
of  questions  involving  the  reasonableness  of  rate,  the  reasoning 
with  which  it  supports  the  doctrine  above  quoted  commends  its 
conclusions  to  us  as  being  sound.  All  the  evidence  of  appellant  is 
that  the  going-concern  value  of  the  plant  in  this  case  is  equivalent 
to  20  per  cent,  of  the  reproductive  value.  This  evidence  is  not 
contradicted  by  the  state.  The  position  of  counsel  for  the  state 
and  of  the  Commission  being  that,  whatever  its  amount  is,  it  is  not 
an  element  of  present  value  forming  a  basis  for  the  earning  of 
rates.  Twenty  per  cent,  of  the  reproductive  value  is  $18,932.73, 
which,  added  to  the  reproductive  value  of  the  physical  properties 
found  by  the  Commission,  makes  a  total  present  value,  on  which 
appellant  is  entitled  to  receive  a  fair  return,  in  the  sum  of  $113,- 
596.42. 


SEC.   v.] 


THE   CAPITAL.  313 


HILL  V.  AXTIGO  WATEE  CO. 
3  Wis.  R.  C.  R.  623.     1909.^ 

Cost  of  Building  Up  the  Business. 

The  facts  thus  far  presented  show  the  cost  to  the  owner  of 
the  original  construction  of  the  plant,  including  all  extensions; 
the  gross  and  net  earnings  of  the  plant  for  the  entire  period; 
the  cost  of  reproducing  the  plant  new,  and  the  present  value 
of  the  plant.  The  cost  of  construction,  and  the  present  value 
of  the  plant  relate  to  its  physical  property  only.  They  show 
the  cost  to  the  owner  of  obtaining  a  plant  up  to  the  point  where 
it  was  ready  for  business  or  for  operation.  They  also  show  what 
it  would  cost  to  build  a  like  plant  today  under  the  prices  which 
prevailed  during  a  few  of  the  years  which  immediately  preceded 
1908.  They  further  show  its  present  value  or  the  balance  left 
when  the  cost  of  reproduction  new  is  reduced  by  the  amount  of 
the  depreciation  that  has  occurred. 

The  facts  thus  enumerated  are  among  the  more  important  ele- 
ments that  should  be  taken  into  consideration  in  determining 
the  value  of  a  plant.  But  while  important,  they  are  not  the  only 
ones  that  should  be  considered  in  this  connection.  '"There  are  other 
facts,  such  as  the  cost  of  building  up  the  business  of  a  plant,  that 
are  almost,  if  not  equally,  as  important.)  This  cost  bears  about  the 
same  relation  to  the  business  of  a  plant  as  that  which  the  cost  of 
construction  bears  to  its  physical  structure.  Besides  this,  appraisers 
and  engineers,  when  called  upon  to  value  such  plants,  are  often 
considering  the  earning  value  of  the  business  or  the  number  of 
customers  the  plants  have  acquired,  as  well  as  the  franchises  under 
which  they  are  operating,  and  these  elements  are  also  often  taken 
into  account  by  courts  in  passing  upon  such  appraisals. 

A  water  works  plant  can,  perhaps,  be  called  a  going  concern. 
But  it  cannot  be  called  a  going  business  or  a  paying  concern 
until  it  has  acquired  a  sufficient  amount  of  business  so  that  the 
revenues  obtained  from  the  water  it  furnishes  are  large  enough 
to  meet  operating  expenses,  including  a  reasonable  amount  for 
interest  and  profit  on  the  investment. 

A  mere  physical  plant,  no  matter  how  perfect  or  how  well 
it  is  adapted  to  the  purpose  for  which  it  is  intended,  amounts 
to  but  little  unless  it  has  or  can  obtain  a  paying  business.  With- 
out business  it  is  a  dead  mass  instead  of  a  living  concern  earn- 
ing profits.  To  have  profits  it  must  have  business  or  customers 
1  Only  an  extract  from  the  opinion  is  here  reprinted.—  Ed. 


314:  RATES.  [chap.   IV. 

who  avail  themselves  of  the  services  it  renders  at  rates  that  yield 
an  adequate  income. 

But  new  plants  are  seldom  paying  at  the  start.  Several  years 
are  usually  required  before  they  obtain  a  sufficient  amount  of 
business  or  earnings  to  cover  operating  expenses,  including  de- 
preciation and  a  reasonable  rate  of  interest  upon  the  investment. 
The  amount  by  which  the  earnings  fail  to  meet  these  require- 
ments may  thus  be  regarded  as  deficits  from  the  operation.  These 
deficits  constitute  the  cost  of  building  up  the  business  of  the 
plant.  They  are  as  much  a  part  of  the  cost  of  building  up  the 
business  as  loss  of  interest  during  the  construction  of  the  plant 
is  a  part  of  the  cost  of  its  construction.  They  are  taken  into 
account  by  those  who  enter  upon  such  undertakings,  and  if  they 
cannot  be  recovered  in  some  way,  the  plant  fails  by  that  much  to 
yield  reasonable  returns  upon  the  sum  that  has  been  expended  upon 
it  and  its  business. 

Such  costs  or  deficits  are,  generally  speaking,  unavoidable.  Few, 
if  any,  plants  are  paying  from  the  start.  The  only  way  in  which 
many,  if  not  most  of  them,  can  be  made  paying  concerns  at  the 
start  is  apparently  by  having  the  city  or  tax  payers  foot  the 
deficit.  Private  customers  cannot  always  be  made  to  foot  them, 
for  the  rates  required  to  yield  reasonable  returns  at  the  start  or  while 
the  business  is  light,  are  more  than  likely  to  be  so  high  that  rather 
than  pay  them  the  consumers  would  forego  the  service.  Both  of 
these  methods  of  m,aking  up  the  deficits,  therefore,  would  seem  to 
be  impracticable.  It  would  seem  to  follow  from  this,  that  early 
losses  will  have  to  be  met  by  the  investors.  This  is  as  true  for 
plants  owned  and  operated  by  the  municipality  as  for  plants  owned 
and  operated  by  private  investors.)  There  is  apparently  no  way  in 
which  this  can  be  prevented. 

But  while  such  losses  will  have  to  be  met  by  the  investors,  it 
is  not  expected  that  these  sacrifices  will  be  anything  but  temporary) 
The  investors  fully  expect,  and  in  most  cases  rightly  so,  that  these 
losses  will  be  made  good  as  soon  as  warranted  by  the  business 
of  the  plant.  They  usually  regard  such  deficits  as  an  additional 
investment  upon  which,  unless  the  whole  amount  is  refunded  to 
them  in  some  form,  they  are  entitled  to  the  same  returns  as  on  the 
rest  of  their  capital.  Unless  they  are  so  compensated,  it  is  mani- 
festly clear  that  no  money  from  private  sources  is  likely  ever  to 
be  invested  for  such  purposes,  except,  perhaps,  in  a  few  rare  in- 
stances for  philanthropic  reasons.  If  there  is  not  a  reasonable 
assurance  of  reasonable  returns  upon  the  cost  of  the  plant,  as  well 
as  upon  the  cost  of  the  business  of  the  said  plant,  it  is  manifestly 
clear  that  private  investors  will  seek  other  fields.     It  is  upon  this 


SEC.    v.]  THE   CAPITAL.  315 

basis  only  that  such  plants  will  be  built  at  all,  at  least  by  private 
capital.  Communities  that  are  not  willing  to  bear  this  expense 
are  also  likely  to  have  to  do  without  such  conveniences  as  water 
under  pressure,  except  in  cases  where  the  functions  of  the  in- 
vestors are  assumed  by  the  tax  payers  through  the  construction 
of  municipal  plants.  Even  in  the  case  of  municipal  plants  it  is 
necessary  that  the  costs  in  question  should  be  covered  if  permanent 
losses  to  the  tax  payers  are  to  be  avoided. 

^The  total  investment  consists  of  the  cost  of  the  plant,  of  its 
business,  and  of  its  franchise.  The  cost  of  operation  consists  of 
the  expenses  of  running  the  plant,  including  depreciation  and  a 
reasonable  return  upon  the  investment.  The  amount  represented 
by  the  investment  is  furnished  by  the  investors;  the  operating 
expenses  are  borne  by  the  consumers./  If  the  earnings  are  not 
sufficient  to  cover  these  expenses,  the  service  will,  in  the  long  run, 
not  be  furnished.  In  other  words,  in  this  case,  as  in  life  generally, 
the  price  must  be  paid  if  the  service  is  to  be  had.  As  services  of 
this  kind  are  usually  worth  more  than  they  cost,  it  is,  as  a  rule,  in 
line  with  the  best  policy  that  they  should  be  provided  and  that  the 
cost  of  the  same  should  be  paid  in  full. 

Jt  thus  appears  that  the  cost  of  building  up  the  business  of 
a  plant  is  in  most  cases  as  unavoidable  as  the  cost  of  the  con- 
struction of  the  plant  itself;; that  when  such  costs  are  incurred, 
they  must  be  reimbursed  in  some  form  by  the  consumers  in  order 
that  capital  may  be  secured;  that  such  reimbursement  is  equitable 
as  between  investors  and  consumers ;  and  that  this  is  a  just  method 
of  dealing  with  such  costs  for  other  reasons.  If  this  is  sound,  it 
also  follows  that  the  cost  of  the  business  must  also  be  taken  into 
consideration  in  determining  the  value  of  the  plants  for  rate- 
fixing  purposes. 

This  would  seem  to  apply  with  special  force  where  by  law 
the  rates  are  limited  so  as  not  to  yield  more  than  reasonable  re- 
turns upon  the  investment.  While  such  legislation  may  not  be 
a  guarantee  against  losses  of  any  kind,  it  is  clear  that  if  the  rates 
fixed  under  these  laws  should  not  include  anything  for  the  cost 
of  building  up  the  business,  there  would  be  no  way  in  which  these 
costs  could  be  made  good  to  the  investors.  In  that  event  these 
costs  would  become  a  permanent  loss  to  them;  and  the  consumers, 
in  turn,  would  be  relieved  from  paying  a  reasonable  return  on  a 
part  of  the  investment  or  on  the  capital  that  is  devoted  to  furnishing 
them  with  the  service  in  question.  This  is  a  situation  of  which  the 
investors  are  taking  due  notice,  and  which  is  entitled  to  due  con- 
sideration. If  not  taken  into  account,  it  will  tend  to  keep  new 
capital  from  entering  this  field  as  well  as  to  prevent  exact  justice 


316  EATES.  [chap.    IV. 

to  capital  which  has  already  entered  the  same.  The  former  would 
result  in  hardships  or  inconveniences  to  the  consumers;  the  latter 
would  apparently  be  unjust  to  at  least  many  of  the  present  investors 
in  such  utilities.^ 


LONG  BRANCH  COMMISSION  v.  TINTERN  MANOR 
WATER  CO. 

70  N.  J.  Eq.  71.     1905> 

Pitney,  V.  C.  This  brings  us  to  the  cost  of  the  new  plant  in 
producing  proof  of  which  a  large  amount  of  time  and  space  were 
occupied.  They  were  commenced  by  a  contracting  company  under 
specifications  of  the  work  given  in  detail  and  were  to  be  paid  for  in 
$1,200,000  in  first  mortgage  bonds  and  divers  shares  of  the  capital 
stock  of  the  par  value  of  $100,000. 

Difficulties  were  encountered  in  carrying  out  this  contract  accord- 
ing to  its  terms,  and  the  plans  were  changed.  The  result  of  this 
was  that  the  contractors  were  not  held  to  their  bargain,  but  were 
paid  in  bonds  and  stock  according  to  the  actual  amount  of  their 
expenditures. 

In  order  to  ascertain  those  expenditures  an  inventory  of  the 
work  done  was  taken,  and  the  cost  was  ascertained  by  the  vouchers 
and  checks  furnished  by  the  contractors. 

The  defendant  estimates  the  cost  including  the  Takanassee  and 
Deal  works  at  $1,500,000  and  upwards,  without  counting  the 
shares  of  stock  which  were  issued  and  which  may  be  here  treated 
as  a  mere  bonus. 

Several  distinct  criticisms  and  objections  are  made  to  the  details 
given  of  this  valuation.  First,  it  is  said  that  the  cost  of  the  site 
for  the  reservoir,  amounting  to  $76,000,  is  too  great.  The  land 
itself,  consisting  of  several  hundred  acres,  cost  $40,000  and  the  cost 
of  clearing,  $35,000. 

In  fact,  only  about  one-third  or  one-half  of  this  land  has  been  so 
far  covered  with  water,  and  much  more  than  the  amount  covered 
has  been  cleared. 

The  fact  is  that  the  original  plan  provided  for  a  very  large 
reservoir,  including  a  very  high  dam,  but  in  carrying  it  out  a  lower 
dam  and  smaller  reservoir  were  adopted. 

2  See  City  of  Appleton  v.  Appleton  W.  W.  Co.  (1910),  5  Wis.  R.  C.  R. 
215.  276;  Re  Application  of  Oconto  City  W.  S.  Co.  (1911),  7  Wis.  R.  C.  R. 
497,  51.5. 

Compare  Spring  Valley  W.  Co.  v.  San  Francisco  (1908),  1G5  Fed.  667. 
696. 

1  Part  of  the  opinion  is  omitted. —  Ed. 


SEC.   v.]  THE    CAPITAL.  317 

It  is  admitted  that  the  present  supply  is  ample  for  many  years  to 
come.     I  shall  deduct  from  the  total  $35,000  on  this  account. 

The  next  item  criticised  is  the  cost  of  the  dam  itself,  the  total 
cost  of  which  was  $89,500. 

The  objection  to  this  is  that  it  was  laid  out  and  erected  to  its 
present  height  of  a  width  sufficient  for  a  dam  two  or  three  times 
as  high,  and  that  such  construction  cost  nearly  or  quite  twice  as 
much  as  it  would  have  done  for  a  dam  of  its  present  height.  I 
think  this  objection  is  well  taken,  but  not  to  the  extent  claimed  by 
complainants.  I  shall  deduct  $30,000  on  account  of  the  excessive 
cost  of  the  dam. 

The  next  objection  is  to  the  size  of  the  principal  main  laid,  viz., 
about  42,000  feet  of  36-inch  main,  which  was  much  too  large  and 
expensive,  and  that  complainant  ought  not  to  be  charged  with  an 
income  on  so  great  an  outlay.  Defendant  admits  that  its  plans 
were  adapted  to  a  future  estimated  growth  of  50  years. 

Mr.  Sherrerd  says,  and  1  agree  with  him,  that  50  years  is  too  long 
for  a  forecast.  He  fixed  30  years  as  the  usual  limit.  Now  it  is 
readily  perceived  that  the  difference  in  cost  between  a  36-inch  main 
and  a  24  or  30-inch  main  is,  or  may  be,  so  great  that  if  it  be  saved 
and  invested  it  will  with  the  accrued  interest  in  a  period  of  30  years 
reach  a  sum  sufficient  to  lay  an  additional  main  if  the  first  shall 
at  that  time  prove  to  be  insufficient. 

I  conclude,  then,  that  a  thirty-inch  main  from  the  dam  to  the 
pumping  station  (nearly  two  miles),  and  from  thence  to  the  town 
(over  six  miles),  is  ample,  flanked,  as  it  is,  by  an  eighteen-inch 
main  from  Little  Silver  to  Seabright,  each  of  these  aiding  the 
other  in  the  case  of  an  emergency  of  fire. 

Besides,  I  am  entirely  satisfied  that  the  estimate  for  seventy-five 
gallons  per  head  per  day  would  be  reduced  below  fifty  gallons  per 
day  by  the  general  introduction  of  meters,  and  such  reduction  of 
consumption,  or  rather  of  waste,  will  result  in  the  saving  of  fuel 
for  making  steam.  This,  I  think,  it  is  the  clear  duty  of  the  defend- 
ant to  accomplish  "as  soon  as  practicable. 

By  the  use  of  the  same  hydraulic  tables  showing  the  relative 
weight  of  thirty  and  thirty-six  inch  mains  and  the  difference  in 
weight  in  lead  used  in  joining  the  same,  I  conclude  that  the  reduc- 
tion of  cost  of  the  thirty-six  inch  main  laid,  if  a  thirty-inch  main 
had  been  used,  would  have  been  one-quarter. 

The  total  cost  of  the  eight  miles  of  the  thirty-six  inch  main,  with 
the  appliances,  was  $300,000.  One-fourth  of  that  would  be  $75,000, 
which  I  shall  allow  on  that  account. 

The  next  objection  is  to  the  amount  paid  ($425,000)  for  the  old 
works.     No  reliable  statement  was  made  as  to  what  those  works 


318  RATES.  [chap.   IV. 

originally  cost  the  old  company.  All  that  was  said  was  that  the 
present  proprietors  would  not  sell  them  for  less  than  $325,000, 
besides  the  bonded  debt.  But,  then,  we  must  consider  that  there  was 
not  an  actual  sale  for  cash,  but  a  merging  into  a  new  corporation. 
On  the  other  hand,  there  was  some  actual  loss  in  the  abandonment 
of  the  old  plant  and  the  amount  spent  in  and  about  the  dam  and 
pumping  station  at  Takanassee.  I  estimate  it  at  $100,000.  I 
deduct,  then,  from  the  $1,500,000,  as  follows :  Whole  cost  of  works 
$1,500,000;  loss  on  Takanassee,  $100,000;  overcost  of  thirty-six 
inch  main,  $75,000 ;  overcost  of  dam,  $30,000 ;  overcost  on  reservoir, 
$25,000;  total  loss,  $230,000,  leaving  $1,270,000  as  the  amount  upon 
which  defendant  ought  to  receive  dividends.^ 


THE  MINNESOTA  EATE  CASES. 

230  U.  S.  352.     1913.^ 

Mr.  Justice  Hughes  delivered  the  opinion  of  the  court. 

These  are  the  results  of  the  endeavor  to  apply  the  cost-of-repro- 
duction  method  in  determining  the  value  of  the  right  of  way.  It  is 
at  once  apparent  that,  so  far  as  the  estimate  rests  upon  a  supposed 
compulsory  feature  of  the  acquisition,  it  cannot  be  sustained.  It 
is  said  that  the  company  would  be  compelled  to  pay  more  than  what 
is  the  normal  market  values  of  property  in  transactions  between 
private  parties;  that  it  would  lack  the  freedom  they  enjoy,  and, 
in  view  of  its  needs,  it  would  have  to  give  a  higher  price.  It  is 
also  said  that  this  price  would  be  in  excess  of  the  present  market 
value  of  contiguous  or  similiarly  situated  property.  It  might  well 
be  asked,  who  shall  describe  the  conditions  that  would  exist,  or  the 
exigencies  of  the  hypothetical  owners  of  the  property,  on  the  assump- 
tion that  the  railroad  were  removed?  But,  aside  from  this,  it  is 
impossible  to  assume,  in  making  a  Judicial  finding  of  what  it  would 
cost  to  acquire  the  property,  that  the  company  would  be  compelled 
to  pay  more  than  its  fair  market  value.  It  is  equipped  with  the 
governmental  power  of  eminent  domain.  In  view  of  its  public 
purpose,  it  has  been  granted  this  privilege  in  order  to  prevent 
advantage  being  taken  of  its  necessities.  It  would  be  free  to  stand 
upon  its  legal  rights,  and  it  cannot  be  supposed  that  they  would 
be  disregarded. 

It  is  urged  that,  in  this  view,  the  company  would  be  bound  to 
pay  the  "  railway  value  "  of  the  property.     But,  supposing  the  rail- 

2  Compare  Mayhew  v.  Kings  County  L.  Co.  (1911),  2  P.  S.  C,  1st  D.  of 
N.  Y.  659,  683;  San  Diego  L.  &  T.  Co.  v.  Jasper  (1903),  189  U.  S.  439,  446. 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


SEC.    v.]  THE    CAPITAL.  319 

road  to  be  obliterated  and  the  lands  to  be  held  by  others,  the  owner 
of  each  parcel  would  be  entitled  to  receive  on  its  condemnation, 
its  fair  market  value  for  all  its  available  uses  and  purposes.  United 
States  V.  Chandler-Dunbar  Water  Power  Co.  decided  May  36,  1913, 
239  TJ.  S.  503.  If,  in  the  case  of  any  such  owner,  his  property  had 
a  peculiar  value  or  special  adaptation  for  railroad  purposes,  that 
would  be  an  element  to  be  considered.  Mississippi  &  E.  Eiver  Boom 
Co.  V.  Patterson,  98  U.  S.  403 ;  Shoemaker  v.  United  States,  147 
U.  S.  283;  United  States  v.  Chandler-Dunbar  Water  Power  Co. 
sup-a.  But  still  the  inquiry  would  be  as  to  the  fair  market  value 
of  the  property;  as  to  what  the  owner  had  lost,  and  not  what  the 
taker  had  gained.  Boston  Chamber  of  Commerce  v.  Boston,  217  U. 
S.  189,  195.  The  owner  would  not  be  entitled  to  demand  payment 
of  the  amount  which  the  property  might  be  deemed  worth  to  the 
company ;  or  of  an  enhanced  value  by  virtue  of  the  purpose  for  which 
it  was  taken ;  or  of  an  increase  over  its  fair  market  value,  by  reason 
of  any  added  value  supposed  to  result  from  its  combination  with 
tracts  acquired  from  others,  so  as  to  make  it  a  part  of  a  continuous 
railroad  right  of  way  held  in  one  ownership.  United  States  v. 
Chandler-Dunbar  Water  Power  Co.,  supra  and  Boston  Chamber  of 
Commerce  v.  Boston,  supra.  There  is  no  evidence  before  us  from 
which  the  amount  which  would  properly  be  allowable  in  such  con- 
demnation proceedings  can  be  ascertained. 

Moreover,  it  is  manifest  that  an  attempt  to  estimate  what  would 
be  the  actual  cost  of  acquiring  the  right  of  way  if  the  railroad 
were  not  there  is  to  indulge  in  mere  speculation.  The  railroad  has 
long  been  established ;  to  it  have  been  linked  the  activities  of  agri- 
culture, industry,  and  trade.  Communities  have  long  been  depend- 
ent upon  its  service,  and  their  growth  and  development  have  been 
conditioned  upon  the  facilities  it  has  provided.  The  uses  of  prop- 
erty in  the  communities  which  it  serves  are  to  a  large  degree  deter- 
mined by  it.  The  values  of  property  along  its  line  largely  depend 
upon  its  existence.  It  is  an  integral  part  of  the  communal  life. 
The  assumption  of  its  nonexistence,  and  at  the  same  time  that  the 
values  that  rest  upon  it  remain  unchanged,  is  impossible  and  can- 
not be  entertained.  The  conditions  of  ownership  of  the  property 
and  the  amounts  which  would  have  to  be  paid  in  aquiring  the 
right  of  way,  supposing  the  railroad  to  be  removed,  are  wholly 
beyond  reach  of  any  process  of  rational  determination.  (The  cost- 
of-reproduction  method  is  of  service  in  ascertaining  the  present  value 
of  the  plant,  when  it  is  reasonably  applied  and  when  the  cost  of 
reproducing  the  property  may  be  ascertained  with  a  proper  degree 
of  certainty.\  But  it  does  not  justify  the  acceptance  of  results 
which  depend  upon  mere  conjecture.     It  is  fundamental  that  the 


320  RATES.  [chap.    IV. 

judicial  power  to  declare  legislative  action  invalid  upon  constitu- 
tional grounds  is  to  be  exercised  only  in  clear  cases.  The  consti- 
tutional invalidity  must  be  manifest,  and  if  it  rests  upon  disputed 
questions  of  fact,  the  invalidating  facts  must  be  proved.  And 
this  is  true  of  asserted  value  as  of  other  facts. 

The  evidence  in  these  cases  demonstrates  that  the  appraisements 
of  the  St.  Paul  and  Minneapolis  properties  which  were  accepted 
by  the  master  were  in  substance  appraisals  of  what  was  considered 
to  be  the  peculiar  value  of  the  railroad  right  of  way.  Efforts  to 
express  the  results  in  the  terms  of  a  theory  of  cost  of  reproduction 
fail,  as  naturally  they  must,  to  alter  or  obscure  the  essential  char- 
acter of  the  work  undertaken  and  performed.  Presented  with  an 
impossible  hj-pothesis,  and  endeavoring  to  conform  to  it,  the  ap- 
praisers—  men  of  ability  and  experience  —  were  manifestly  seek- 
ing to  give  their  best  judgments  as  to  what  the  railroad  right  of 
way  was  worth.  And  doubtless  it  was  believed  that  it  might  cost 
even  more  to  acquire  the  property,  if  one  attempted  to  buy  into 
the  cities  as  they  now  exist,  and  all  the  difficulties  that  might 
be  imagined  as  incident  to  such  a  "  reproduction  "  were  considered. 
The  railroad  right  of  way  was  conceived  to  be  a  property  sui 
generis,  "  a  large  body  of  land  in  a  continuous  ownership,"  repre- 
senting one  of  the  "  highest  uses  "  of  property,  and  possessing  an 
exceptional  value.  The  estimates  before  us,  as  approved  by  the 
master,  with  his  increase  of  25  per  cent  in  the  case  of  the  Duluth 
property,  must  be  taken  to  be  estimates  of  the  "railway  value" 
of  the  land;  and  whether  or  not  this  is  conceived  of  as  paid  to 
other  owners  upon  a  hypothetical  reacquisition  of  the  property  is 
not  controlling  when  we  come  to  the  substantial  question  to  be 
decided. 

That  question  is  whether,  in  determining  the  fair  present  value 
of  the  property  of  the  railroad  company  as  a  basis  of  its  charges  to 
the  public,  it  is  entitled  to  a  valuation  of  its  right  of  way  not  only 
in  excess  of  the  amount  invested  in  it,  but  also  in  excess  of  the 
market  value  of  contiguous  and  similarly  situated  property.  For 
the  purpose  of  making  rates,  is  its  land  devoted  to  the  public  use 
to  be  treated  (irrespective  of  improvements)  not  only  as  increasing 
in  value  by  reason  of  the  activities  and  general  prosperity  of  the 
community,  but  as  constantly  outstripping  in  this  increase,  all  neigh- 
boring lands  of  like  character,  devoted  to  other  uses?  If  rates 
laid  by  competent  authority,  state  or  national,  are  otherwise  just 
and  reasonable,  are  they  to  be  held  to  be  unconstitutional  and  void, 
because  they  do  not  permit  a  return  upon  an  increment  so  calculated  ? 
ilt  is  clear  that  in  ascertaining  the  present  value  we  are  not 
limited  to  the  consideration  of  the  amount  of  the  actual  investments 


SEC.   v.]  THE    CAPITAL.  321 

If  that  has  been  reckless  or  improvident,  losses  may  be  sustained 
which  the  community  does  not  underwrite.  As  the  company  may 
not  be  protected  in  its  actual  investment,  if  the  value  of  its  property 
be  plainly  less,  so  the  making  of  a  just  return  for  the  use  of  the 
property  involves  the  recognition  of  its  fair  value  if  it  be  more  than 
its  cost.  The  property  is  held  in  private  ownership,  and  it  is  that 
property,  and  not  the  original  cost  of  it,  of  which  the  owner  may  not 
be  deprived  without  due  process  of  law.  But  still  it  is  property 
employed  in  a  public  calling,  subject  to  governmental  regulation, 
and  while,  under  the  guise  of  such  regulation,  it  may  not  be  con- 
fiscated, it  is  equally  true  that  there  is  attached  to  its  use  the  con- 
dition that  charges  to  the  public  shall  not  be  unreasonable.  And 
where  the  inquiry  is  as  to  the  fair  value  of  the  property,  in  order 
to  determine  the  reasonableness  of  the  return  allowed  by  the  rate- 
making  power,  it  is  not  admissible  to  attribute  to  the  property  owned 
by  the  carriers  a  speculative  increment  of  value,  over  the  amount 
invested  in  it  and  beyond  the  value  of  similar  property  owned  by 
others,  solely  by  reason  of  the  fact  that  it  is  used  in  the  public 
service.  That  would  be  to  disregard  the  essential  conditions  of  the 
public  use,  and  to  make  the  public  use  destructive  of  the  public 
right. 

The  increase  sought  for  "  railway  value "  in  these  cases  is  an 
increment  over  all  outlays  of  the  carrier  and  over  the  values  of 
similar  land  in  the  vicinity.  It  is  an  increment  which  cannot 
be  referred  to  any  known  criterion,  but  must  rest  on  a  mere  expres- 
sion of  judgment  which  finds  no  proper  test  or  standard  in  the 
transactions  of  the  business  world.  It  is  an  increment  which,  in 
the  last  analysis,  must  rest  on  an  estimate  of  the  value  of  the  rail- 
road use  as  compared  with  other  business  uses ;  it  involves  an  appre- 
ciation of  the  returns  from  rates  (when  rates  themselves  are  in  dis- 
pute) and  a  sweeping  generalization  embracing  substantially  all  the 
activities  of  the  community.  For  an  allowance  of  this  character 
there  is  no  warrant. 

Assuming  that  the  company  is  entitled  to  a  reasonable  share  in 
the  general  prosperity  of  the  communities  which  it  serves,  and  thus 
to  attribute  to  its  property  an  increase  in  value,  still  the  increase 
so  allowed,  apart  from  any  improvements  it  may  make,  cannot 
properly  extend  beyond  the  fair  average  of  the  normal  market  value 
of  land  in  the  vicinity  having  a  similar  character.  Otherwise  we 
enter  the  realm  of  mere  conjecture.  vWe  therefore  hold  that  it  was 
error  to  base  the  estimates  of  value  of  the  right  of  way,  yar^s,  and 
terminals  upon  the  so-called  "  railway  value  "  of  the  property^  The 
company  would  certainly  have  no  ground  of  complaint  if  it  were 
allowed  a  value  for  these  lands  equal  to  the  fair  average  market 


322  EATES.  [chap.  IV. 

value  of  similar  land  in  the  vicinity,  without  additions  by  the  use 
of  multipliers,  or  otherwise,  to  cover  hypothetical  outlays.^ 


In  re  KATES  OF  QUEENS  BOROUGH  GAS  AND 
ELECTRIC  CO. 

2  P.  S.  C,  1st  D.  of  N.  Y.  544.     1911.^ 

Maltbie,  Commissioner.  Thus  land  has  been  taken  at  its  fair 
value,  and  not  at  its  original  cost,  and  the  annual  appreciation  of 
land  has  been  treated  as  a  profit.  By  this  method,  all  property  is 
treated  absolutely  alike,  as  Judge  Hough  suggests.  No  difference 
is  made,  except  as  depreciation  represents  a  decrease  in  assets,  it 
is  placed  as  a  debit  against  operation,  while  appreciation  is  placed 
as  credit  because  it  is  an  increase  in  assets.  Land  has  sometimes 
been  treated  like  other  property  only  to  a  degree;  that  is,  each 
class  has  been  appraised  at  its  present  worth  or  value.  That  has 
been  done  in  this  case.  But  if  property  is  to  be  taken  at  its 
depreciated  value  where  it  has  depreciated,  an  entry  must  regularly 
be  made  in  estimating  operating  expenses  equal  to  the  average 
annual  depreciation.  Conversely,  if  land,  or  any  other  property 
which  genuinely  appreciates  in  value,  is  to  be  taken  at  its  appreciated 
value,  then  an  entry  must  be  made  in  the  estimated  receipts  equal 
to  the  annual  appreciation.  Unless  this  is  done,  it  is  obvious  that 
the  consumer  will  be  burdened  with  all  the  estimated  decreases  in 
assets  but  not  credited  with  the  increases  in  assets.  If  the  prin- 
ciple laid  down  by  the  courts  is  to  be  followed  in  part,  it  should  be 
followed  in  whole. 

It  is  suggested  that  the  annual  increase  in  the  value  of  land  which 
is  treated  as  income  is  not  actually  received.  Increase  in  the  value 
of  unoccupied  land  is  not  realized  until  sold  or  put  into  use,  but  it 
is  real,  nevertheless,  although  payment  may  be  deferred.  Like- 
wise, payments  to  the  depreciation  fund  are  not  actually  expended ; 
yet  they  have  been  considered  legitimate  charges  in  practically 
every  case.     Furthermore,  the  annual  increment  is  no  more  in- 

2  "  In  the  fourth  place,  contributions  by  the  city  should  be  deducted.  The 
city  of  New  York  has  paid  to  the  Brooklyn  Union  Elevated  Railroad  Com- 
pany approximately  $800,000  [the  amount  contributed  by  the  city  towards 
the  cost  of  bridges,  crossings,  etc.].  No  company  ought  to  be  allowed  to 
capitalize  such  contributions,  or  charge  a  rate  which  will  yield  a  fair  re- 
turn upon  these  contributions.  With  equal  propriety  the  companies  couhl 
claim  the  right  to  earn  profits  upon  the  capitalized  value  of  the  streets  and 
of  the  Brooklyn  and  Williamsburg  bridges,  which  they  have  been  allowed 
to  use  practically  without  charge.  The  capitalization  of  franchises,  a  pro- 
cedure prohibited  by  the  law,  would  be  more  plausible."  Dissenting  opinion 
of  Maltbie,  Commissioner,  in  In  re  MacRovnolds  v.  Brooklyn  Un.  R.  R. 
Co.   (1910),  2  P.  S.  C,  1st  D.  of  N.  Y.  240,  2G.5. 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


SEC.   v.]  THE    CAPITAL.  323 

definite  than  the  total  increment  —  the  present  value.  But  if  the 
present  value  can  be  determined,  it  is  possible  to  determine  past 
annual  appreciation  with  positive  accuracy,  for  it  is  only  a  simple 
mathematical  calculation.  It  is  also  probably  as  easy  to  estimate 
increases  in  the  near  future  as  it  is  to  estimate  what  obsolescence, 
which  is  a  form  of  depreciation,  there  will  be  in  the  future. 

Indeed,  the  problem  of  handling  appreciation  is  much  simpler 
than  depreciation.  If  the  property  is  growing  more  valuable, 
the  investor  need  not  worry;  and  if  the  state  recognizes  his  right 
to  earn  a  fair  return  upon  the  increase,  he  is  fully  protected.  It 
is  not  necessary  that  the  increase  be  represented  by  stocks  and 
bonds,  for,  if  the  earning  power  is  there,  he  will  receive  a  return 
thereon,  regardless  of  the  amount  of  securities.  In  fact,  the  exist- 
ence of  an  increase  which  is  not  represented  by  securities  is  an 
element  of  safety,  a  reserve  fund  of  a  valuable  kind. 

There  is  a  further  similarity.  The  exact  amount  of  depreciation 
and  the  annual  rate  are  not  definitely  known  until  the  piece  of 
property  is  actually  replaced  or  has  become  useless.  The  total 
appreciation  and  the  average  annual  rate  are  not  known  until  the 
land  is  sold,  but  when  it  has  been  disposed  of  (and  plants  are  con- 
tinually being  removed  and  the  land  sold),  they  become  absolute 
certainties.  Why  should  these  matters  be  considered  less  definite 
when  applied  to  land  than  when  applied  to  the  buildings  thereon  ? 
The  depreciation  of  the  building  is  a  charge  against  operation; 
why  should  not  appreciation  of  land  be  a  credit? 

The  entries  in  the  preceding  tables  representing  the  increase  in 
land  have  been  carefully  computed.  It  has  been  possible  to  ascer- 
tain the  approximate  cost  of  the  land  and  the  date  of  purchase. 
Having  these  facts,  one  may  easily  compute  the  average  annual 
rate  of  increase.  The  experts  called  by  the  company  and  the  Com- 
mission were  also  examined  upon  the  present  trend  of  prices.  The 
estimated  increases  used  in  the  above  computations  are  believed  to 
be  conservative. 


BEYMEE  V.  BUTLEE  WATER  CO. 

179  Pa.  St.  231.     1897.^ 

Mr.  Justice  Williams.  In  determining  the  amount  of  the 
investment  by  the  stockholders,  it  can  make  no  difference  that  money 
earned  by  the  corporation,  and  in  a  position  to  be  distributed  by  a 
dividend  among  its  stockholders,  was  used  to  pay  for  improve- 
ments and  stock  issued  in  lieu  of  cash  to  the  stockholders.     It  is 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


324  RATES.  [chap.  IV. 

not  necessary  that  the  money  should  first  be  paid  to  the  stockliolder, 
and  then  returned  by  him  in  payment  for  new  stock  issued  to  him.j 
The  net  earnings,  in  equity,  belonged  to  him,  and  stock  issued  to 
him  in  lieu  of  the  money  so  used  that  belonged  to  him  was  issued 
for  value,  and  represents  an  actual  investment  by  the  holder.  If 
the  company  makes  an  increase  of  stock  that  is  fictitious,  and  repre- 
sents no  value  added  to  the  property  of  the  corporation,  such  stock 
is  rather  in  the  nature  of  additional  income  than  of  additional 
investment. 


CHICAGO,  MILWAUKEE  AND  ST.  PAUL  EAILWAY 
CO.  V.  TOMPKINS. 

176  U.  S.  167.     1900.^ 

Mr.  Justice  Brewer  delivered  the  opinion  of  the  court. 

It  may  be  premised  that  the  books  of  the  plaintiff,  showing  its 
business  for  the  four  years,  were  examined,  and  so  much  as  was 
deemed  necessary  admitted  in  evidence.  From  those  books  was 
disclosed  with  mathematical  accuracy  the  gross  receipts  of  the 
company  on  all  its  business  in  all  the  States  during  each  of  the 
four  years  and  the  actual  cost  of  doing  that  business  during  each 
of  those  years;  also  the  gross  receipts  from  the  business  done  in 
South  Dakota,  and  separately  the  amount  which  was  received  in 
that  State  from  interstate  business  and  that  from  local.  If  the 
schedule  of  rates  prescribed  by  the  defendants  had  been  in  force 
during  the  four  years,  and  the  same  amount  of  business  had  been 
done  by  the  company,  the  reduction  in  gross  receipts  from  the 
passenger  business  would  have  been  fifteen  per  cent,  and  from  the 
freight  business  seventeen  per  cent.  Of  course,  the  cost  of  doing  the 
business  would  be  substantially  the  same.  The  court  found  the 
value  of  the  plaintiff's  property  in  South  Dakota  to  be  $10,000,000, 
although,  according  to  the  testimony,  it  was  bonded  for  over  $19,- 
000,000.  It  held  that  it  was  not  fair  to  consider  that  sum,  $10,000,- 
000,  the  value  of  the  property  employed  in  doing  local  business, 
for  it  was  also  used  in  doing  interstate  business ;  and  that  the  true 
way  to  determine  the  value  of  the  property  which  could  be  regarded 
as  employed  in  local  business  was  by  dividing  the  total  value  of 
$10,000,000  in  the  same  proportion  that  existed  between  the  amount 
of  gross  receipts  from  interstate  business  and  that  from  local  busi- 
ness, each  of  which  amounts  was,  as  we  have  seen,  accurately  shown 
by  the  testimony.  Upon  that  basis  of  division, it  found  that  the 
value  of  the  company's  property  employed  in  local  business  was 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


SEC,   v.]  THE   CAPITAL.  325 

for  the  first  year,  $3,200,000;  the  second  year,  $2,600,000;  the 
third  year,  $2,100,000;  and  the  last  year,  $1,900,000,  and  also  that 
the  gross  receipts  from  local  business  were  for  the  first  year, 
18.5  per  cent  of  the  valuation;  for  the  second  year,  12.7  per 
cent;  for  the  third  year,  15.6  per  cent,  and  for  the  last  year,  16.3 
per  cent.  In  other  words,  for  these  several  years  the  company 
received  as  compensation  for  doing  its  local  business  the  per  cent 
named  of  the  real  value  of  the  property  used  in  doing  that  business. 
Then,  proceeding  on  the  supposition  that  the  defendant's  schedule 
had  been  in  force  and  the  rates  reduced  as  therein  prescribed 
during  these  four  years,  it  divided  the  valuation  of  $10,000,000  on 
the  like  proportion  of  the  receipts  from  interstate  business  to  the 
receipts  from  local  business  as  thus  diminished,  and  upon  such 
division  found  that  the  valuation  of  the  plaintiff's  property  engaged 
in  local  business  would  have  been,  for  the  first  year,  $1,900,000 ;  for 
the  second  year,  $2,300,000;  for  the  third  year,  $1,800,000;  and  the 
last  year,  $1,600,000;  and  upon  such  basis  that  the  gross  receipts 
from  local  business  would  have  amounted  to  18  per  cent  of  the 
value  of  the  property  for  the  first  year,  12.1  for  the  second,  15.3 
for  the  third,  and  16.2  for  the  last.  Upon  this  it  held  that  the 
difference  between  the  per  cent  of  receipts  in  the  two  cases  was 
slight,  and  that  there  was  no  change  in  what  may  rightfully  be 
called  the  earning  capacity  of  the  property  sufficient  to  justify  a 
declaration  that  the  reduced  rates  prescribed  were  unreasonable. 
In  other  words,  it  was  of  the  opinion  that  the  earning  capacity  was 
so  slightly  reduced  that  it  could  not  be  affirmed  that  the  new  rates 
were  unreasonable. 

But  that  there  was  some  fallacy  in  this  reasoning  would  seem 
to  be  suggested  by  the  fact  that  although  the  defendants'  schedvile 
would  have  reduced  the  actual  receipts  15  per  cent  on  the  passenger 
and  17  per  cent  on  the  freight  business,  the  earning  capacity  for  the 
last  year  was  diminished  only  one  tenth  of  one  per  cent.  Such  a 
result  indicates  that  there  is  something  wrong  in  the  process  by 
which  the  conclusion  is  reached.  That  there  was,  can  be  made 
apparent  by  further  computations,  and  in  them  we  will  take  even 
numbers  as  more  easy  of  comprehension.  Suppose  the  total  value 
of  the  property  in  South  Dakota  was  $10,000,000,  and  the  total 
receipts  both  from  interstate  and  local  business  were  $1,000,000, 
one  half  from  each.  Then,  according  to  the  method  pursued  by 
the  trial  court,  the  value  of  the  property  used  in  earning  local 
receipts  would  be  $5,000,000,  and  the  per  cent  of  receipts  to  value 
would  be  10  per  cent.  The  interstate  receipts  being  unclunge  1,  let 
the  local  receipts  by  a  propvc^cJ  schedule  be  reduced  to  one  fifth 
of  what  they  had  been,  so  that  instead  of  receiving  $500,000  the 


326  RATES.  [chap.  IV. 

company  only  receives  $100,000.  The  total  receipts  for  interstate 
and  local  business  being  then  $600,000,  the  valuation  of  $10,000,000, 
divided  between  the  two,  would  give  to  the  property  engaged  in 
earning  interstate  receipts  in  round  numbers  $8,333,000,  and  to  that 
engaged  in  earning  local  receipts  $1,667,000.  But  if  $1,667,000 
worth  of  property  earns  $100,000  it  earns  six  per  cent.  In  other 
words,  although  the  actual  receipts  from  local  business  are  only 
one  fifth  of  what  they  were,  the  earning  capacity  is  three  fifths 
of  what  it  was.  And  turning  to  the  other  side  of  the  problem,  it 
appears  that  if  the  value  of  the  property  engaged  in  interstate 
business  is  to  be  taken  as  $8,333,000,  and  it  earned  $500,000,  its 
earning  capacity  was  the  same  as  that  employed  in  local  business  — 
six  per  cent.  So  that  although  the  rates  for  interstate  business 
be  undisturbed,  the  process  by  which  the  trial  court  reached  its 
conclusion  discloses  the  same  reduction  in  the  earning  capacity  of 
the  property  employed  in  interstate  business  as  in  that  employed  in 
local  business,  in  which  the  rates  are  reduced.- 


Section  6. 

What  Eate  of  Eeturn  Should  Be  Allowed. 

CEDAR  EAPIDS  WATER  CO.  v.  CITY  OF  CEDAR  RAPIDS. 
118  la.  234.     1902.^ 

Weaver,  J.     We  shall  not  attempt  to  go  into  any  minute  state- 
ment or  analysis  of  the  figures  and  computations  relied  upon  by 

2  In  Minnesota  Rate  Cases  (1913),  230  U.  S.  352,  461,  after  quoting  from 
tlm-last  paragraph  reprinted  above,  Mr.  Justice  Hughes  said: 

iT'Tlie  value  of  tlie  use,  as  measured  by  return,  cannot  be  made  the  cri- 
tehon  when  the  return  itself  is  in  question.  If  the  return,  as  formerly 
allowed,  be  taken  as  the  basis,  then  the  validity  of  the  State's  reduction 
would  have  to  be  tested  by  the  very  rates  which  the  State  denounced  as 
exorbitant.  And,  if  the  return  as  permitted  under  the  new  rates  be  taken, 
then  the  State's  action  itself  reduces  the  amount  of  value  upon  which  the 
fairness  of  the  return  is  to  be  computed. 

"  When  rates  are  in  controversy,  it  would  seem  to  be  necessary  to  find  a 
basis  for  a  division  of  the  total  value  of  the  property  independently  of 
revenue,  and  this  must  be  found  in  the  use  that  is  made  of  the  property, 
^hat  is,  there  should  be  assigned  to  each  business,  that  proportion  of  the 
total  value  of  the  property  which  will  correspond  to  the  extent  of  its  em- 
ployment in  that  business.  It  is  said  that  this  is  extremely  difiicult ;  in 
particular,  because  of  the  necessity  for  making  a  division  between  the  pas- 
senger and  freight  business  and  the  obvious  lack  of  correspondence  between 
ton-miles  and  passenger-miles.  It  does  not  appear,  however,  that  these  are 
the  only  units  available  for  such  a  division  :  and  it  would  seem  that,  after 
assigning  to  the  passenger  and  freight  departments  respectively,  the  pr9P- 
erty  exclusively  used  in  each,  comparable  use-units  might  be  found  which 
would  afford  the  basis  for  a  reasonable  division  with  respect  to  property 
used  in  common.  It  is  suggested  that  other  methods  of  calculation  would 
be  equally  unfavorable  to  the  State  rates,  but  this  we  cannot  assume^' 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


SEC.  VI.]  RATE  OF  RETURN  ALLOWED.  327 

counsel.  Some  of  the  items  b}'  which  plaintiff  increases  the  alleged 
value  of  the  works  and  reduces  the  showing  of  net  earnings,  as 
well  as  other  items  by  which  the  defendant  decreased  the  former 
and  increased  the  latter,  we  think  are  unwarranted.  The  testi- 
mony, when  taken  as  a  whole,  and  considered  in  the  light  of  all 
the  proved  and  admitted  circumstances,  indicates  the  present  fair 
value  of  the  company's  property  to  be  somewhere  from  $^00,000 
to  $500,000.  The  total  earnings  of  the  works,  as  charged  upon 
plaintiff's  books,  for  the  year  preceding  the  trial  in  the  district 
court,  were,  in  round  numbers,  $59,000,  subject,  however,  to  some 
discounts  for  advance  pa3'ments.  Of  this  income  about  one-third 
is  charged  to  the  city,  and  is  not  affected  by  the  ordinance  in  con- 
troversy. The  other  two-thirds  are  collected  from  private  con- 
sumers, and  the  charges  for  such  service  are  reduced  by  the  ordi- 
nance in  varying  proportions.  Just  the  extent  which  this  reduction 
will  affect  the  company's  earnings  it  is  impossible  to  prove  or  predict 
with  certainty,  but  we  see  no  reason  to  believe  that  the  total  revenue, 
after  making  all  due  allowance  for  discounts,  will  be  reduced  below 
$50,000.  The  operating  expenses  charged  for  the  year  preceding  the 
trial  (being  largely  in  excess  of  the  average  in  its  experience)  were 
$23,000,  or,  including  taxes,  $28,000.  On  this  basis  the  net  earn- 
ings are  5^  per  cent,  on  a  valuation  of  $400,000,  or  4%  per  cent, 
on  a  valuation  of  $500,000,  or  6^  per  cent,  on  the  total  amount  of 
capital  stock  and  bonds.  (Stated  otherwise,  this  will  enable  the 
company  to  pay  its  interest  charge  of  $7,500,  make  a  dividend  of 
5  per  cent,  on  its  capital  stock  (including  stock  issued  as  dividends), 
and  leave  a  margin  of  over  $3,000  for  contingencies.  This  estimate 
of  earnings  may  be  very  materially  reduced,  or  the  estimate  of  the 
value  of  the  plant  be  very  materially  increased,  before  the  court 
will  be  justified  in  saying  that  the  plaintiff's  property  is  being  ex- 
posed to  destruction  or  confiscation  by  an  unprofitable  schedule  of 
rates^ 

We  have  pursued  this  subject  far  enough  to  demonstrate  that, 
even  taking  the  high  estimate  of  value  which  plaintiff  places  upon 
its  property,  and  its  own  showing  of  earnings,  there  is  nothing  in 
the  ordinance  sought  to  be  nullified  which  calls  for  judicial  inter- 
ference. LThe  net  earnings  upon  this  showing,  if  not  large,  are 
substantial.^  The  court  cannot  undertake  to  guarantee  the  com- 
pany any  fixed  or  certain  return  upon  its  investment.  The  exercise 
of  such  a  power  would  work  an  utter  destruction  of  the  legislative 
right  to  regulate  rates  of  water  companies  and  other  corporations 
operating  works  of  public  utility.  (_We  think  the  decisions  have 
already  gone  to  the  verge  of  safety  in  nullifying  legislative  acts 
of  this  character ;  and  to  go  farther,  and  say  that  the  courts  will  not 


328  RATES.  [chap.    IV. 

only  preserve  property  from  confiscation  and  destruction  by  legis- 
lative power,  but  will  also  assure  to  its  owners  a  definite  and  fixed 
rate  of  profit  upon  their  investment,  would  be  an  act  of  judicial 
usurpation.^/ 


WILCOX  V.  CONSOLIDATED  GAS  CO. 
212  U.  S.  19.     1909.^ 

Mr.  Justice  Peckham  delivered  the  opinion  of  the  court. 
There  is  no  particular  rate  of  compensation  which  must,  in  all 
cases  and  in  all  parts  of  the  country,  be  regarded  as  suificient  for 
capital  invested  in  business  enterprises.  Such  compensation  must 
depend  greatly  upon  circumstances  and  locality ;  among  other  things, 
the  amount  of  risk  in  the  business  is  a  most  important  factor,  as 
-well  as  the  locality  where  the  business  is  conducted,  and  the  rate 
expected  and  usually  realized  there  upon  investments  of  a  some- 
what similar  nature  with  regard  to  the  risk  attending  them.  There 
may  be  other  matters  which,  in  some  cases,  might  also  be  properly 
taken  into  account  in  determining  the  rate  which  an  investor  might 
properly  expect  or  hope  to  receive  and  which  he  would  be  entitled 
to  without  legislative  interference.  The  less  risk,  the  less  right 
to  any  unusual  returns  upon  the  investments.  One  who  invests 
his  money  in  a  business  of  a  somewhat  hazardous  character  is  very 
properly  held  to  have  the  right  to  a  larger  return,  without  legislative 
interference,  than  can  be  obtained  from  an  investment  in  govern- 
ment bonds  or  other  perfectly  safe  security^  The  man  that  invested 
in  gas  stock  in  1833  had  a  right  to  look  for  and  obtain,  if  possible, 
a  much  greater  rate  upon  his  investment  than  he  who  invested  in 
such  property  in  the  city  of  New  York  years  after  the  risk  and 
danger  involved  had  been  almost  entirely  eliminated. 

In  an  investment  in  a  gas  company,  such  as  complainant's,  the 
risk  is  reduced  almost  to  a  minimum.  It  is  a  corporation  which,  in 
fact,  as  the  court  below  remarks,  monopolizes  the  gas  service  of  the 
largest  city  in  America,  and  is  secure  against  competition  under  the 
circumstances  in  which  it  is  placed,  because  it  is  a  proposition  al- 
most unthinkable  that  the  city  of  New  York  would,  for  purposes  of 
making  competition,  permit  the  streets  of  the  city  to  be  again  torn 
Tip  in  order  to  allow  the  mains  of  another  company  to  be  laid  all 
through  them  to  supply  gas  which  the  present  company  can  ade- 
quately supply.  And,  so  far  as  it  is  given  us  to  look  into  the  future, 
it  seems  as  certain  as  anything  of  such  a  nature  can  be,  that  the  de- 

2  See  Chicago  &  N.  W.  Ry.  Co.  v.  Dey  (1888),  35  Fed.  8G6,  879. 
lOnly  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


SEC.    VI.]  EATE   OF   EETUILN"   ALLOWED.  329 

mand  for  gas  will  increase,  and,  at  the  reduced  price,  increase  to  a 
considerable  extent.  An  interest  in  such  a  business  is  as  near  a  safe 
and  secure  investment  as  can  be  imagined  with  regard  to  any  private 
manufacturing  business,  although  it  is  recognized  at  the  same  time 
that  there  is  a  possible  element  of  risk,  even  in  such  a  business.  The 
court  below  regarded  is  as  the  most  favorably  situated  gas  business 
in  America,  and  added  that  all  gas  business  is  inherently  subject  to 
many  of  the  vicissitudes  of  manufacturing.  Under  the  circum- 
stances, the  court  held  that  a  rate  which  would  permit  a  return  of 
6  per  cent  would  be  enough  to  avoid  a  charge  of  confiscation,  and  for 
the  reason  that  a  return  of  such  an  amount  was  the  return  ordinarily 
sought  and  obtained  on  investments  of  that  degree  of  safety  in  the 
city  of  New  York. 

Taking  all  facts  into  consideration,  we  concur  with  the  court  be- 
low on  this  question,  and  think  complainant  is  entitled  to  6  per  cent 
on  the  fair  value  of  its  property  devoted  to  the  public  use.j 


DES  MOINES  WATEE  CO.  v.  CITY  OF  DES  MOINES. 
192  Fed.  193.     1911.^ 

Smith  McPherson",  District  Judge.  The  waterworks  company 
claims  that  certain  other  specific  things,  by  name,  should  be  allowed, 
either  by  way  of  enhancing  the  value  of  the  property,  or  that  which 
would  be  the  same  thing,  by  calling  them  hazards,  and  allowing 
such  rates  as  would  produce  a  reasonable  revenue  thereon.  One 
of  these  is  the  fact  that  rates  are  subject,  at  any  time,  to  change  by 
the  city  council,  subject  to  local  prejudice,  and  without  experience 
or  training  with  reference  thereto ;  the  hazard  that  the  city,  at  any 
time,  can  force  an  involuntary  sale  by  proceedings  of  condemnation ; 
the  fact  that  the  franchise  cannot  extend  beyond  25  years,  with 
no  assurance  that  it  will  be  renewed ;  another  competing  plant  may 
be  allowed;  the  city  may  establish  a  competing  plant;  and  other 
minor  hazards. 

There  can  be  no  question  but  that  some  of  these  matters  should  be 
given  consideration.  The  greater  the  hazard,  the  higher  the  rate  of 
interest.'  A  farmer  who  observes  his  contracts  and  pays  his  debts 
can  get  a  loan  at  a  low  rate  of  interest  by  a  mortgage  on  his  farm. 
A  man  whose  credit  is  not  good,  and  who  can  only  tender  security 
of  a  doubtful  character,  must  pay  a  higli  rate  of  interest.  This  has 
always  been  so,  and  always  will  remain  so.  The  fact  that  the  com- 
pany's charter  may  be  revoked  by  a  forced  sale,  or  that  it  may  expire 

1  Part  of  the  opinion  is  omitted. —  Ed. 


330  RATES.  [chap.    IV. 

at  the  end  of  25  years,  and  that  it  will  be  continuously  kept  in  liti- 
gation, are  all  hazards,  which  in  other  business  enterprises  would 
increase  the  rate  of  interest  that  the  borrower  must  pay,  and  justly 
entitles  it  to  a  higher  rate  of  earnings  than  if  its  earnings  were  cer- 
tain and  fixed,  and  were  in  perpetuity  or  of  long  duration^,  But  it 
is  well-nigh  impossible  to  point  out  just  what  particular  hazard,  and 
to  what  extent  such  a  particular  hazard,  will  increase  the  rate  of 
interest,  or  will  entitle  it  to   higher  rate  of  earnings. 

From  the  most  exhaustive  reading  and  consideration  of  the 
voluminous  record  in  this  case,  a  record  of  many  thousands  of  pages, 
I  not  only  cannot  say  that  the  findings  of  the  master  as  to  the  value 
of  this  water  plant  have  not  been  fairly  stated  by  him,  when  he 
states  that  it  is  worth  not  less  than  $1,840,000,  in  round  numbers, 
and  perhaps,  that  it  is  worth  something  like  $15,000  in  excess  of 
that ;  but  I  think  that  the  master  has  been  conservative  in  fixing  this 
valuation.  It  can  be  well  said  that,  if  he  is  in  error,  it  has  been  by 
an  undervaluation. 

Taking  into  account  the  expenses  of  approximately  $122,000  per 
year,  the  reduction  proposed  by  the  new  ordinance  would  make  the 
plant  unremunerative  to  the  extent  that  it  is  entitled  to  receive,  con- 
sidering the  fair  value  of  money  in  a  state  like  Iowa.  And,  con- 
sidering the  hazards  and  liabilities,  some  of  them  certain  and  others 
contingent,  and  some  of  them  destructive,  an  8  per  cent,  return  is 
moderate.     But  this  proposed  ordinance  would  allow  nothing  like  8 

per  cent. 

IaII  fair-minded  people  should  readily  agree,  and  the  defendant 
city  and  its  officers  ought  to  agree,  that  reasonable  returns  should  be 
allowed  to  not  only  these  investments,  but  these  dangers  and  hazards, 
which  clearly  are  to  be  taken  into  account,  under  the  authoritiesj 
Some  of  the  leading  cases  which  support  the  foregoing  are  the  fol- 
lowing: City  of  Omaha  v.  Omaha  Water  Company,  218  U.  S.  180, 
30  Sup.  Ct.  615,  54  L.  Ed.  991 ;  National  Waterworks  Company  v. 
Kansas  City,  62  Fed.  853,  10  C.  C.  A.  653,  27  L.  R.  A.  827;  Spring 
Valley  Co.  v.  San  Francisco  (C.  C.)  124  Fed.  574;  Kennebec  Water 
District  V.  City  of  Waterville,  97  Me.  185,  54  Atl.  6,  60  L.  R.  A.  856  ; 
Brunswick,  etc.,  v.  Maine  Water  Co.,  99  Me.  371,  59  Atl.  537 ;  Glou- 
cester Water  Co.  v.  City  of  Gloucester,  179  Mass.  365,  60  N.  E.  977 ; 
Norwich  Gas  &  Electric  Co.  v.  City  of  Norwich,  76  Conn.  565,  57 
Atl.  746;  Galena  Water  Co.  v.  City  of  Galena,  74  Kan.  644,  87  Pac. 
735;  Newburyport  Water  Co.  v.  City  of  Newburyport,  168  Mass. 
541,  47  N.  E.  533 ;  Town  of  Bristol  v.  Bristol  Water  Works,  23  R. 
I.  274,  49  Atl.  974 ;  Wilcox  v.  Consolidated  Gas  Co.  212  IT.  S.  19, 
29  Sup.  Ct.  192,  53  L.  Ed.  382.  The  foregoing  authorities  sustain 
the  foregoing  holdings. 


SEC.  VI.]  KATE  OF  EETURN  ALLOWED.  331 

The  exceptions,  both  of  the  city  and  of  the  waterworks  company, 
are  all  overruled.  The  report  of  the  master  is  confirmed,  and  there 
will  be  a  decree  enjoining  the  enforcement  of  the  ordinance  in  ques- 
tion. 


COTTIXG  V.  KANSAS  STOCK  YAEDS  CO. 

183  U.  S.  79.     1901.^ 

Mr.  Justice  Brewer  delivered  the  opinion  of  the  court. 

In  the  light  of  these  quotations,^  this  may  be  affirmed  to  be  the 
present  scope  of  the  decisions  of  this  court  in  respect  to  the  power 
of  the  legislature  in  regulating  rates :  As  to  those  individuals  and 
corporations  who  have  devoted  their  property  to  a  use  in  which 
the  public  has  an  interest,  although  not  engaged  in  a  work  of  a 
confessedly  public  character,  there  has  been  no  further  ruling  than 
that  the  State  may  prescribe  and  enforce  reasonable  charges.  What 
shall  be  the  test  of  reasonableness  in  those  charges  is  absolutely 
undisclosed. 

As  to  parties  engaged  in  performing  a  public  service,  while  the 
power  to  regulate  has  been  sustained,  negatively  the  court  has  held 
that  the  legislature  may  not  prescribe  rates  which  if  enforced  would 
amount  to  a  confiscation  of  property.  But  it  has  not  held  affirm- 
atively that  the  legislature  may  enforce  rates  which  stop  only  this 
side  of  confiscation,  and  leave  the  property  in  the  hands  and  under 
the  care  of  the  owners  without  any  remuneration  for  its  use.  It 
has  declared  that  the  present  value  of  the  property  is  the  basis  by 
which  the  test  of  reasonableness  is  to  be  determined,  although  the 
actual  cost  is  to  be  considered,  and  that  the  value  of  the  services 
rendered  to  each  individual  is  also  to  be  considered.  It  has  also 
ruled  that  the  determination  of  the  legislature  is  to  be  presumed 
to  be  just,  and  must  be  upheld  unless  it  clearly  appears  to  result  in 
enforcing  unreasonable  and  unjust  rates. 

If  the  rates  prescribed  by  the  Kansas  statute  for  yarding  and 
feeding  stock  had  been  in  force  during  the  year  1896  the  income  of 
the  stock-yards  company  would  have  been  reduced  that  year  $300,- 
651.77,  leaving  a  net  income  of  $289,916.96.     This  would  have 

1  Only  a  part  of  the  opinion  is  reprinted. —  Ed. 

2  From   Munn   v.    Illinois.   94  U.   S.    113,   12.5;    Spring  V    W    W    Co    r 

l3l"'a^c.i^o^^■  K\f'i>%^''  R-lroad  .ConamissioE  cfsel  116  ^ '  S^f. 
■i.il,  ^-hicago  M.  &  St.  P.  Ry.  Co.   i'.  Minnesota.  1.34  U.   S    418    4.58-  Chi- 

ein  nt^-r^  .  ^-  ^^^'  ^^ '  St.  Louis  &  S.  F.  Rv.  Co.  V.  Gill  1.56  U  S 
649,  657 ;  Covington  etc.,  T.  Co.  v.  Sandford.  164  U.  S.  .578,  506  •  Smytii  r" 
73^757 -Ed  '  ^^^'   ^^  ^'^^"^  ^-  ^''-  ""■  National  City^  174^17    s! 


333  EATES.  [chap.  IV. 

yielded  a  return  of  5.3  per  cent  on  the  value  of  property  used  for 
stock-yard  purposes,  as  fixed  by  the  master.  Or  if  the  capital  stock 
be  taken  after  deducting  therefrom  such  portion  thereof  which  rep- 
resents property  not  used  for  stock-yard  purposes,  the  return  would 
be  4.6  per  cent. 

ISTow,  in  the  light  of  these  decisions  and  facts,  it  is  insisted  that 
the  same  rule  as  to  the  limit  of  judicial  interference  must  apply  in 
cases  in  which  a  public  service  is  distinctly  intended  and  rendered 
and  in  those  in  which,  without  any  intent  of  public  service,  the 
owners  have  placed  their  property  in  such  a  position  that  the  public 
has  an  interest  in  its  use.     Obviously  there  is  a  difference  in  the 
conditions  of  these  cases.     In  the  one  the  owner  has  intentionally 
devoted  his  property  to  the  discharge  of  a  public  service.     In  the 
other  he  has  placed  his  property  in  such  a  position  that,  willingly 
or  unwillingly,  the  public  has  acquired  an  interest  in  its  use.     In 
the  one  he  deliberately  undertakes  to  do  that  which  is  a  proper  work 
for  the  state.     In  the  other,  in  pursuit  of  merely  private  gain,  he 
has  placed  his  property  in  such  a  position  that  the  public  has  become 
interested  in  its  use.     In  the  one  it  may  be  said  that  he  voluntarily 
accepts  all  the  conditions  of  public  service  which  attach  to  like 
service  performed  by  the  State  itself.     In  the  other,  that  he  sub- 
mits to  only  those  necessary  interferences  and  regulations  which  the 
public  interests  require.     In  the  one  he  expresses  his  willingness  to 
do  the  work  of  the  State,  aware  that  the  State  in  the  discharge 
of  its  public  duties  is  not  guided  solely  by  a  question  of  profit.     It 
may  rightfully  determine  that  the  particular  service  is  of  such  im- 
portance to  the  public  that  it  may  be  conducted  at  a  pecuniary 
loss,  having  in  view  a  larger  general  interest.     At  any  rate,  it 
does  not  perform  its  services  with  the  single  idea  of  profit.     Its 
thought  is  the  general  public  welfare.     If  in  such  a  case  an  indi- 
vidual is  willing  to  undertake  the  work  of  the  State,  may  it  not  be 
urged  that  he  in  a  measure  subjects  himself  to  the  same  rules  of 
action,  and  that  if  the  body  which  expresses  the  judgment  of  the 
State  believes  that  the  particular  services  should  be  rendered  with- 
out profit  he  is  not  at  liberty  to  complain?     While  we  have  said 
again  and  again  that  one  volunteering  to  do  such  services  cannot  be 
compelled  to  expose  his  property  to  confiscation,  that  he  cannot  be 
compelled  to  submit  its  use  to  such  rates  as  do  not  pay  the  expenses 
of  the  work,  and  therefore  create  a  constantly  increasing  debt  which 
ultimately  works  its  appropriation,  still  is  there  not  force  in  the 
suggestion  that  as  the  State  may  do  the  work  without  profit,  if  he 
voluntarily  undertakes  to  act  for  the  State  he  must  submit  to  a  like 
determination  as  to  the  paramount  interests  of  the  public  ? 

Again,  wherever  a  purely  public  use  is  contemplated,  the  State 


SEC.  VI.]  EATE  OF  RETURN  ALLOWED.  333 

may  and  generally  does  bestow  upon  the  party  intending  such  use 
some  of  its  governmental  powers.  It  grants  the  right  of  eminent 
domain,  by  which  property  can  be  taken,  and  taken,  not  at  tlie 
price  fixed  by  the  owner,  but  at  the  market  value.  It  thus  enables 
him  to  exercise  the  powers  of  the  State,  and,  exercising  those  powers 
and  doing  the  work  of  the  State,  is  it  wholly  unfair  to  rule  that  he 
must  submit  to  the  same  conditions  which  the  State  may  place  upon 
its  own  exercise  of  the  same  powers  and  the  doing  of  the  same 
work?  It  is  unnecessary  in  this  case  to  determine  this  question. 
We  simply  notice  the  arguments  which  are  claimed  to  justify  a 
difference  in  the  rule  as  to  property  devoted  to  public  uses  from 
that  in  respect  to  property  used  solely  for  purposes  of  private  gain, 
and  which  only  by  virtue  of  the  conditions  of  its  use  becomes  such 
as  the  public  has  an  interest  in. 

In  reference  to  this  latter  class  of  cases,  which  is  alone  the 
subject  of  present  inquiry,  it  must  be  noticed  that  the  individual 
is  not  doing  the  work  of  the  state.  He  is  not  using  his  property 
in  the  discharge  of  a  purely  public  service.  He  acquires  from  the 
state  none  of  its  governmental  powers.  His  business  in  all  mat- 
ters of  purchase  and  sale  is  subject  to  the  ordinary  conditions  of 
the  market  and  the  freedom  of  contract.  He  can  force  no  one 
to  sell  to  him,  he  cannot  prescribe  the  price  which  he  shall  pay. 
He  must  deal  in  the  market  as  others  deal,  buying  only  when 
he  can  buy  and  at  the  price  at  which  the  owner  is  willing  to  sell, 
and  selling  only  when  he  can  find  a  purchaser  and  at  the  price 
which  the  latter  is  willing  to  pay.  If  under  such  circumstances 
he  is  bound  by  all  the  conditions  of  ordinary  mercantile  transactions 
he  may  justly  claim  some  of  the  privileges  which  attach  to  those 
engaged  in  such  transactions.  And  while  by  the  decisions  here- 
tofore referred  to  he  cannot  claim  immunity  from  all  state  regu- 
lation he  may  rightfully  say  that  such  regulation  shall  not  operate 
to  deprive  him  of  the  ordinary  privileges  of  others  engaged  in  mer- 
cantile business. 

Pursuing  this  thought,  we  add  that  the  state's  regulation  of  his 
charges  is  not  to  be  measured  by  the  aggregate  of  his  profits,  de- 
termined by  the  volume  of  business,  but  by  the  question  whether 
any  particular  charge  to  an  individual  dealing  with  him  is,  con- 
sidering the  service  rendered,  an  unreasonable  exaction.  In  other 
words,  if  he  has  a  thousand  transactions  a  day,  and  his  charges  in 
each  are  but  a  reasonable  compensation  for  the  benefit  received 
by  the  party  dealing  with  him,  such  charges  do  not  become  un- 
reasonable because  by  reason  of  the  multitude  the  aggregate  of  his 
profits  is  large.  The  question  is  not  how  much  he  makes  out 
of  his  volume  of  business,  but  whether  in  each  particular  transac- 


334  RATES.  [chap.   IV. 

tion  the  charge  is  an  unreasonable  exaction  for  the  services  ren- 
dered. He  has  a  right  to  do  business.  He  has  a  right  to  charge 
for  each  separate  service  that  which  is  reasonable  compensation 
therefor,  and  the  legislature  may  not  deny  him  such  reasonable 
compensation,  and  may  not  interfere  simply  because  out  of  the 
multitude  of  liis  transactions  the  amount  of  his  profits  is  large.^ 

3  Mb.  Justice  Harlan,  with  whom  concurred  Mr.  Justice  Gray,  Mb. 
Justice  Brown,  Mb.  Justice  Shiras,  Mb.  Justice  White  and  Mr.  Jus- 
tice McKenna : 

"  We  assent  to  the  judgment  of  reversal  —  so  far  as  the  merits  of  the 
case  are  concerned  —  upon  the  ground  that  the  statute  of  Kansas  in  ques- 
tion is  in  violation  of  the  Fourteenth  Amendment  of  the  Constitution  of  the 
United  States,  in  that  it  applies  only  to  the  Kansas  City  Stock  Yards  Com- 
pany and  not  to  other  companies  or  corporations  engaged  in  like  business  in 
Kansas,  and  thereby  denies  to  that  company  the  equal  protection  of  the 
laws.  Upon  the  question  whether  the  statute  is  unconstitutional  upon  the 
further  ground  that,  by  its  necessary  operation,  it  will  deprive  that  com- 
pany of  its  property  without  due  process  of  law^  we  deem  it  unnecessary  to 
express  an  opinion." 


r^^ 


i>. 


CHAPTER  V. 
DISCRIMINATION. 

THE  SUE. 
22  Fed.  843.     1885.^ 

Morris,  C.  J.  This  suit  (with  three  others  of  like  character  by 
other  female  libelants)  has  been  instituted  to  recover  damages  on  the 
allegation  that  the  libelant,  Avho  is  a  colored  woman  of  unobjection- 
able character  and  conduct,  and  who  had  purchased  a  first-class 
ticket  for  a  passage  on  the  steam-boat  Sue,  in  August,  1884,  from 
Baltimore  to  a  landing  in  Virginia,  on  the  Potomac  river,  was 
refused  proper  first-class  sleeping  accommodations  on  board,  and 
was  in  consequence  compelled  to  sit  up  all  night  in  the  saloon,  and 
experienced  great  discomforts.  The  answer  of  the  claimants  of  the 
steam-boat  alleges  in  defense  that  there  was  provided  on  board  a 
sleeping  cabin  for  white  female  passengers  in  the  after  part  of 
the  boat,  and  that  a  sleeping  cabin  equally  good  in  every  respect 
was  provided  forward,  on  the  same  deck,  for  female  colored  pas- 
sengers, and  that  these  libelants  were  told  and  well  knew  before 
they  came  on  board  that  the  regulations  of  the  boat  did  not  allow 
either  class  to  intrude  into  the  cabin  of  the  other ;  that  the  libelants 
all  refused  to  sleep  in  cabin  provided  for  the  colored  female 
passengers,  and  preferred  to  remain  sitting  in  the  saloon  all  night 
rather  than  to  go  into  it,  claiming  as  matter  of  right  to  be  al- 
lowed to  go  into  the  white  women's  cabin. 

There  are  two  issues  raised :  The  first  one  of  law,  the  libelants 
denying  the  legal  right  of  the  owners  of  the  steam-boat  to  separate 
passengers  for  any  purpose,  because  of  race  or  color.  The  second 
is  an  issue  of  fact,  the  libelants  denying  that  the  forward  cabin 
assigned  to  them  was,  in  fact,  equal  in  comfort  and  convenience  to 
the  after  cabin  assigned  to  white  women. 

In  determining  the  question  of  law,  it  is  to  be  observed  that  the 
steamer  Sue  is  employed  on  public  navigable  waters,  and  plies  be- 
tween the  port  of  Baltimore  and  ports  in  the  state  of  Virginia,  and 
that  the  regulations  made  by  her  owners  and  enforced  on  board  of 
her,  by  which  colored  passengers  are  assigned  to  a  different  sleeping 

1  Part  of  the  opinion  is  omitted. —  Ed. 


^ 


336  DISCRIMINATION.  [CHAP.   V. 

cabin  from  white  passengers,  is  a  matter  affecting  interstate  com- 
merce. It  is,  therefore,  a  matter  which  cannot  be  regulated  by  state 
law,  and  congress  having  refrained  from  legislation  on  the  subject, 
the  owners  of  the  boat  are  left  at  liberty  to  adopt  in  reference  thereto 
such  reasonable  regulations  as  the  common  law  allows.  Hall  v.  De 
Cuir,  95  U.  S.  490.  One  of  the  restrictions  which  the  common 
law  imposes  is  that  such  regulations  must  be  reasonable,  and  tend 
to  the  comfort  and  safety  of  the  passengers  generally,  and  that 
accommodations  equal  in  comfort  and  safety  must  be  afforded  to 
all  alike  who  pay  the  same  price.  The  law  of  carriers  of  passengers 
in  this  respect  is  well  stated  in  Hutch.  Carr.  §  543.  He  states 
the  result  of  the  decisions  to  be  that,  if  the  conveyance  employed  be 
adapted  to  the  carriage  of  passengers  separated  into  different 
classes  according  to  the  fare  which  may  be  charged,  the  character 
of  the  accommodations  afforded,  or  of  the  persons  to  be  carried,  the 
carrier  may  so  divide  them,  and  any  regulation  confining  those  of 
one  class  to  one  part  of  the  conveyance  will  not  be  regarded  as  un- 
reasonable if  made  in  good  faith  for  the  better  accommodation  and 
convenience  of  the  passengers. 

The  precise  question  raised  in  this  case,  viz.,  whether  a  separ- 
ation of  passengers  as  to  their  sleeping  cabins  on  board  a  steam- 
boat, made  solely  on  the  ground  of  race  or  color,  shall  be  held  to 
be  a  reasonable  regulation,  has  not  to  my  knowledge  been  decided 
in  any  court.  There  have  been  cases  arising  from  separations  made 
in  respect  to  day  travel  as  to  which  there  has  been  some  conflict  of 
views,  and  one  or  two  cases  have  been  cited  in  which  such  separa- 
tions have  been  held  unreasonable.  U.  S.  v.  Buntin,  10  Fed.  Rep. 
739,  note;  Gray  v.  Cincinnati  S.  R.  Co.  11  Fed.  Eep.  683,  note. 
These  differences  of  opinion,  I  think,  may  be  explained,  in  part  at 
least,  by  differences  in  the  circumstances  existing  in  different  com- 
munities. It  is,  in  my  judgment,  a  mixed  question  of  law  and  fact, 
and  whenever  it  appears  that  facts  do  not  exist  which  give  reasoii 
for  the  separation,  the  reasonableness  of  the  regulation  cannot  be 
sustained.  But  the  great  weight  of  authority,  it  seems  to  me, 
supports  the  doctrine  that,  to  some  extent  at  least,  and  under 
some  circumsances,  such  a  separation  is  allowable  at  common 
law. 

But  to  say  that  regulations  based  on  differences  of  race  or  coIot 
may  be  lawful  is  not  to  say  that  every  such  regulation  can  be  up- 
held. The  regulation  must  not  only  be  reasonable  in  that  it  con- 
duces to  the  general  comfort  of  passengers,  but  it  must  not  deny 
equal  conveniences  and  opportunities  to  all  who  pay  the  same 
fare.  This  discrimination  on  account  of  race  or  color  is  one  which 
it  must  be  conceded  goes  to  the  very  limit  of  the  right  of  a  carrier 


DISCEIMIXATION.  337 

to  regulate  the  privileges  of  his  passengers,  and  it  can  only  be 
exercised  when  the  carrier  has  it  in  his  power  to  provide  for  the 
passenger,  who  is  excluded  from  a  place  to  which  another  person, 
paying  the  same  fare,  is  admitted,  accommodations  equally  safe, 
convenient,  and  pleasant. 

This  proposition  of  law,  I  am  informed,  was  applied  by  my 
learned  predecessor.  Judge  Giles,  in  a  suit  brought  by  a  colored 
man  who  had  been  excluded  from  a  street  car.  The  street  car 
company  had  arranged  that  every  third  or  fourth  car,  and  none 
other,  should  be  exclusively  for  colored  people,  but  Judge  Giles 
held  that  this  did  not  afford  equal  convenience  to  this  class  of 
citizens.  And  this  leads  to  the  important  question  of  fact  in 
the  present  case.  The  libelants  testify  that  the  forward  cabin, 
which  was  assigned  to  their  use,  was  offensively  dirty;  that  the 
mattresses  in  the  berths  were  defaced;  that  sheets  were  wanting 
or  soiled,  and  that  there  were  hardly  any  berths  which  had  pillows ; 
that  there  were  no  blankets  and  no  conveniences  for  washing. 
They  testify  that  from  their  own  knowledge  the  white  women's 
cabin  was  clean,  pleasant,  and  inviting,  and  had  none  of  these 
defects.  They  declare  that  on  former  trips  they  had  found  the 
forward  cabin  so  intolerable  that  they  sat  up  all  night,  and,  finding 
it  in  the  same  condition  this  trip,  they  refused  to  remain  in  it, 
and  being  refused  admission  into  the  after  cabin,  again  sat  up  all 
night.  In  these  assertions  they  are  supported  by  five  other  per- 
sons, all  colored  persons,  to  be  sure,  but  respectable,  and  all  having 
had  similar  opportunities  of  experience.  They  claim  also  that 
the  approach  to  the  stairway  to  the  cabin  assigned  for  their  use 
was  obstructed  by  cattle,  and  that  there  was  no  key  with  which 
their  door  could  be  secured,  and  that  its  location  did  not  compare 
in  comfort  with  the  women's  cabin  aft.  While  allowing  a  good 
deal  for  the  inflamed  feelings  of  these  libelants  and  witnesses,  who 
all  testify  under  feelings  of  resentment,  I  still  am  far  from  thinking 
that  they  have,  in  a  reckless  spirit  of  vindictiveness,  made  up  this 
story  from  the  whole  cloth. 

The  separation  of  the  colored  from  the  white  passengers,  solely 
on  the  ground  of  race  or  color,  goes  to  the  verge  of  the  carrier's 
legal  right,  and  such  a  regulation  cannot  be  upheld  unless  bona 
fide,  and  diligently  the  officers  of  the  ship  see  to  it  that  the 
separation  is  free  from  any  actual  discrimination  in  comfort,  at- 
tention, or  appearance  of  inferiority.  The  right  of  the  first-class 
colored  passenger  was  to  have  first-class  accommodation  according 
to  the  standard  of  the  after  cabin  on  the  same  boat,  and  this,  no 
matter  what  might  be  the  difficulties  arising  from  the  greater 
number  of  second-class  colored  passengers.     If  it  is  beyond  the 


338  DISCRIMINATION.  [CHAP.   V. 

power  of  the  owners  of  the  boat  to  afford  this,  then  they  have  no 
right  to  make  the  separation.  On  many  vehicles  for  passenger 
transportation,  the  separation  cannot  be  lawfully  made,  and  the 
right  of  steamboat  owners  to  make  it  depends  on  their  ability  to 
make  it  without  discrimination  as  to  comfort,  convenience,  or  safety. 
I  pronounce  in  favor  of  the  libelants,  and  will  sign  a  decree  for 
$100  in  each  case.^ 

JOHNSON  V.  PENSACOLA  AND  PEEDIDO  EAILROAD  CO. 

16  Fla.  623.     1878.^ 

Mr.  Justice  Westcott.  The  next  question  in  order  in  view 
of  this  conclusion  is,  do  the  facts  set  forth  in  this  declaration  con- 
stitute in  law  a  cause  of  action? 

The  facts  here  alleged  are  that  the  defendant,  a  common  carrier, 
compelled  the  plaintff  to  pay  to  the  defendant,  between  the  first 
day  of  July,  a.  d.  1874,  and  the  first  day  of  March,  a.  d.  1877, 
fifty  cents  per  thousand  feet  on  4,400,000  feet  of  lumber  shipped 
by  plaintiff  over  said  railroad,  making  an  aggregate  of  $3,200 
in  excess  of  what  the  said  defendant  charged  the  Perdido  Bay 
Lumber  Company  for  like  transportation  over  said  railroad  during 
the  said  period,  between  the  first  day  of  July,  a.  d.  1874,  and  the 
first  of  March,  a.  d.  1877. 

Under  the  charter  of  this  company  it  has  the  general  power 
"  to  levy  and  collect  tolls  from  all  persons,  property,  merchandise, 
and  all  other  commodities  transported"  on  its  road.  There  is 
no  statute  in  this  State  regulating  the  matter  of  freights  and 
charges  by  railroad  companies.  It  is  not  denied  that  this  com- 
pany is  a  common  carrier.  We  must,  therefore,  look  to  the  com- 
mon law  for  the  settlement  of  the  question  involved. 

The  question  here  is,  what  was  and  is  the  extent  of  the  obligation 
of  a  common  carrier  at  common  law  to  the  public,  when  viewed 
in  reference  to  charges  for  tolls  and  freights? 

We  have  exhausted  the  material  at  our  hands  in  the  endeavor 
to  ascertain  the  result  of  the  English  cases  upon  this  question. 
We  can  find  in  England  or  the  United  States  no  case  involving 

2  See  McGiiinn  v.  Farbes  (1889),  37  Fed.  639;  Houck  v.  Southern  P.  Ry. 
Co.  (1888),  38  Fed.  226;  Pullman  P.  C.  Co.  v.  Cain  (1897),  15  Tex.  Civ. 
App.  503.     Compare  Day  v.  Owen   (1858),  5  Mich.  520  .  m    p    m 

See  also  with  regard  to  discrimination  in  service:  Cumberland  1.  &  1. 
Co.  V.  Morgan's  L.  &  T.  R.  R.  Co.  (1900),  52  La.  Ann.  1850:  Nichols  v. 
Oregon  S.  L.  Co.  (1901),  24  Utah,  83:  Regina  v.  Sprague  (1899),  63  Jus- 
tice of  the  Peace,  233;  Memphis  News  Pub.  v.  Southern  Ry.  Co.  (1903), 
110  Tenn.  684. 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion  are 
omitted. —  Ed. 


DISCRIMINATION.  339 

the  precise  point  here  involved,  which  i^fwhether,  at  common  law, 
the  defendant,  a  common  carrier,  is  responsible  to  the  plaintiff  for 
the  excess  charged  him  upon  the  like  material  and  during  the  same 
time  over  a  charge  for  like  freights  for  like  material  during  the 
same  time  made  of  another. 

In  the  case  of  the  Fitchburg  Kailroad  Company  v.  Gage  and 
others  (12  Gray,  393),  the  Supreme  Court  of  Massachusetts  held 
"  that  a  railroad  corporation  is  not  obliged  as  a  common  carrier 
to  transport  goods  and  merchandise  for  all  persons  at  the  same 
rates."  In  speaking  of  the  common  law  rule,  that  court  says :  "  It 
requires  equal  justice  to  all.  But  the  equality  which  is  to  be 
observed  in  relation  to  the  public  and  to  every  individual  consists 
in  the  restricted  right  to  charge  in  each  particular  case  of  service 
a  reasonable  compensation  and  no  more.  If  the  carrier  confines 
himself  to  this,  no  wrong  can  be  done  and  no  cause  afforded  for 
complaint."  The  claim  made  in  this  case  arose  out  of  a  difference 
between  the  freights  upon  plaintiff's  ice  and  the  price  charged  oth- 
ers upon  the  same  class  of  freights.  It  was  not  upon  the  same 
material,  but  the  court  treated  the  case  as  involving  the  same 
principle.  It  based  its  conclusion  upon  the  ground  that  the  plain- 
tiff did  not  set  out  a  case  of  excessive  or  unreasonable  charge.  In 
the  last  edition  of  Story  on  Bailments,  we  find  the  rule  of  the 
common  law  thus  stated :  "  At  common  law  a  common  carrier  of 
goods  is  not  under  any  obligation  to  treat  all  customers  equally. 
He  is  bound  to  accept  and  carry  for  all  upon  being  paid  a  reason- 
able compensation.  But  the  fact  that  he  charges  less  for  one 
than  for  another  is  only  evidence  to  show  that  a  particular  charge 
is  unreasonable ;  nothing  more.  There  is  nothing  in  the  common 
law  to  hinder  a  carrier  from  carrying  for  favored  individuals  at 
an  unreasonably  low  rate  or  even  gratis."  In  support  of  this  doc- 
trine the  following  cases  are  cited:  12  Gray,  393;  2  P.  C,  237; 
4  C.  B.  (N.  S.),  78;  12  C.  B.  (N.  S.)  74. 

Our  conclusions  are  that,  as  against  a  common  or  public  carrier, 
every  person  has  the  same  right;  that  in  all  cases,  where  his  com- 
mon duty  controls,  he  cannot  refuse  A.  and  accommodate  B. ; 
that  all,  the  entire  public,  have  the  right  to  the  same  carriage  for  a 
reasonable  price,  and  at  a  reasonable  charge  for  the  service  per- 
formed; that  the  commonness  of  the  duty  to  carry  for  all,  does 
not  involve  a  commonness  or  equality  of  compensation  or  charge; 
that  all  the  shipper  can  ask  of  a  common  carrier  is,  that  for  the 
service  performed  he  shall  charge  no  more  than  a  reasonable  sum 
to  him;  that  whether  the  carrier  charges  another  more  or  less  than 
the  price  charged  a  particular  individual,  may  be  a  matter  of 
evidence  in  determining  whether  a  charge  is  too  much  or  too  little 


340  DISCRIMINATION.  [CHAP.    V. 

for  the  service  performed,   and  that  the  difference  between  the 
charges  cannot  be  the  measure  of  damages  in  any  case,  unless  it  is 
established  by  proof  that  the  smaller  charge  is  the  true  reasonable 
charge  in  view  of  the  transportation  furnished,  and  that  the  higher 
charge  is  excessive  to  that  degree.     The  obligations  in  this  matter 
must  be  reciprocal.     Where  there  is  no  express  contract,  the  com- 
mon law  action  by  the  carrier  against  the  shipper  is  for  a  quantum 
meruit,  and  the  liability  of  the  shipper  is  for  a  reasonable  sum  in 
view  of  the  service  performed  for  him.     What  is  charged  another 
person  (in  this  case  the  amount  charged  the  Perdido  Bay  Lumber 
Company),  or  the  usual  charge  made  against  many  others    (the 
freight  tariff)  is  matter  of  evidence  admissible  to  ascertain  the  value 
of  the  service  performed,   (in  every  case  the  legality  of  the  charge  is 
established  and  measured  hy  the  value  of  the  service  performed, 
and  not  by  what  is  charged  another,  unless  what  is  charged  the  other 
is  the  compensating  sum,  in  which  event  it  is  the  proper  sum, 
not  on  account  of  its  equality,  but  because  of  the  relation  it  bears 
to  the  value  of  the  service  performed  as  an  adequate  compensation 
thereforj    To  sum  the  whole  matter  up,  the  common  law  is  that  a 
common  carrier  shall  not  charge  excessive  freights.     It  protects 
the  individual  from  extortion,  and  limits  the  carrier  to  a  reasonable 
rate,  and  this  on  account  of  the  fact  that  he  exercises  a  public 
employment,  enjoys  exclusive  franchises  and  privileges,  derived,  in 
the  case  of  defendant  here,  by  grant  from  the  State.     The  rule  is 
not  that  all  shall  be  charged  equally,  but  reasonably,  because  the 
law  is  for  the  reasonable  charge  and  not  the  equal  charge.     A 
statement  of  inequality   does  not  make  a  legal  cause  of  action, 
because  it  is  not  necessarily  unreasonable.     It  would  be  a  strange 
rule  indeed  which  would  authorize  a  shipper,  after  being  compelled 
to  pay  his  freights  according  to  established  rates  (this  appears  from 
the  pleas  and  declarations),  to  look  around  and  find  some  smaller 
charge  for  the  same  service  during  the  same  time,  which  may  be 
either  as  a  gratuity,  or  a  sale  of  service  at  a  noncompensating  rate, 
or  less  than  the  reasonable  charge,  and  claim  his  damages  according 
to  this  difference,  based  upon  an  inequality  not  general  in  its  char- 
acter, but  existing  only  by  virtue  of  a  charge  made  for  the  same 
service  against  one  other  person.     If  this  court  sanctions  the  doc- 
trine of  absolute  equality,  and  then  measures  the  damages  by  the 
difference  in  the  charge  as  to  one  person  named  in  a  declaration, 
which  does  not  negative  a  fair  inducement  or  consideration  for  the 
difference,  it  must  sustain  such  a  rule  as  that  stated. 

\The  declaration,  to  be  good  in  law,  must  state  a  case  of  ex- 
cessive charge  for  the  service  performed.  When  it  simply  states  a 
case  of  inequality  of  charge,  it  states  no  cause  of  action,  for  the 


DISCRIMINATION.  341 

smaller  charge  may  be  less  than  reasonable,  and  the  greater  charge 
may  be  exactly  the  value  of  the  service  and  the  reasonable  charge 
for  the  transportation  furnished^ 

Wliether  a  charge  made  by  A.  against  B.  is  reasonable  cannot 
be  determined  by  establishing  the  charge  against  C.  for  the  same 
service.  It  is  too  plain  for  argument  that  the  higher  charge,  where 
there  is  a  difference,  may  be  what  is  the  compensating  sum,  and 
the  lower  charge  may  be  too  small  for  the  service.^ 


COOK  AND  WHEELER  v.  CHICAGO,  EOCK  ISLAND  AND 
PACIFIC  RAILWAY  CO. 

81  Iowa,  551.     1890.^ 

EoTHROCK,  C.  J.  1.  The  action  is  not  founded  upon  any 
statute,  state  or  federal.  The  right  to  recover  is  based  entirely  upon 
the  common  law  pertaining  to  the  duties  and  obligations  of  com- 
mon carriers.  By  an  amended  and  substituted  petition  the  plain- 
tiffs claimed  unlawful  and  unjust  overcharges  upon  the  shipment 
of  316  car-loads.  Each  shipment  was  pleaded  in  a  separate  count 
as  a  separate  cause  of  action.  All  of  the  accounts  were  alike 
except  in  dates  of  shipment,  cars  and  kinds  of  stock  shipped,  and 
stations  from  which  the  shipments  were  made.     It  is  averred,  in 

2  In  Great  Western  Ry.  Co.  v.  Sutton  (1869),  L.  R.  4,  H.  L.  226.  Mk. 
Justice  Blackburn  said,  at  page  237 : 

"  At  common  law  a  person  holding  himself  out  as  a  common  carrier  of 
gooda  was  not  under  any  obligation  to  treat  all  customers  equally.  The 
obligation  which  the  common  law  imposed  upon  him  was  to  accept  and  carry 
all  goods  delivered  to  him  for  carriage  according  to  his  profession  (unless 
he  had  some  reasonable  excuse  for  not  doing  so)  on  being  paid  a  reasonahle 
compensation  for  so  doing ;  and  if  the  carrier  refused  to  accept  such  goods, 
an  action  lay  against  him  for  so  refusing ;  and  if  the  customer,  in  order 
to  induce  the  carrier  to  perform  his  duty,  paid,  under  protest,  a  larger 
sum  than  was  reasonable,  he  might  recover  back  the  surplus  beyond  what 
the  carrier  was  entitled  to  receive,  in  an  action  for  money  had  and  received 
as  being  money  extorted  from  him. 

"  But  the  fact  that  the  carrier  charged  others  less,  though  it  was  evi- 
dence to  show  that  the  charge  was  unreasonable,  was  no  more  than  evidence 
that  way.  There  was  nothing  in  the  common  law  to  hinder  the  carrier 
from  carrying  for  favoured  individuals  at  an  unreasonably  low  price,  or  even 
gratis.  All  that  the  law  required  was.  that  he  should  not  charge  any  more 
than  was  reasonable  :  see  per  Byles,  ./..  in  Baxendale  r.  Eastern  Counties 
Railway  Company  f4  C.  B.  (N.  S.)  78],  and  per  Willes,  J.,  in  Branley  v. 
South  Eastern  Railway  Company  [12  C.  B.  (N.  S.)  74].  But  when  rail- 
ways came  into  operation,  and  it  was  found  that  they  practically  super- 
seded all  other  modes  of  transit,  it  became  a  question  for  the  Legislature  how- 
far  they  would,  when  granting  numerous  persons  power  to  make  a  railway 
and  act  as  carriers  on  that  line,  impose  on  them  restrictions  beyond  what 
the  common  law  imposed  on  ordinary  carriers."     „^   ^  ,.„    ^„^     „      „     , 

See  Cowden  v.  Pacific  Coast  S.  S.  Co.  (1892),  94  Caiif.  470:  Spofiford  v. 
Boston  &  M.  R.  Co.  (1880),  128  Mass.  326;  McNees  v.  Missouri  Pac.  Ry. 
Co.    (1886),  22  Mo.  App.  224. 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion 
are  omitted. —  Ed. 


343  DISCEIMIXATION.  [CHAP.   V. 

substance,  in  the  amended  petition  that  the  public  tariff  rates  for 
shipment  of  live-stock,  from  any  point  in  Jasper  county  during  the 
time  the  plaintiffs  made  such  shipments,  was  $60  for  one  car-load. 
That  the  plaintiffs  paid  the  full  amount  of  said  rates,  and  that 
certain  other  shippers  (who  are  named  in  the  petition)  also  paid 
the  full  tariff  rates ;  ^^jut  that  said  other  shippers  were  allowed 
and  defendant  paid  to  them  a  rebate  or  drawback  upon  each  car-load 
shipped  by  them,,  which  rebate  or  drawback  was  paid  by  defendant 
to  said  shippers,  junder  a  private  and  secret  arrangement  between 
the  defendant  company  and  said  shippers;  and  that  the  knowledge 
of  the  payment  of  such  rebates  was  wrongfully  and  fraudulently 
concealed  from  the  plaintiffs  by  the  defendant,  and  said  other 
favored  shippers. 

The  real  question  in  the  case  is,  do  the  facts  above  recited  au- 
thorize a  recovery  on  the  part  of  the  plaintiffs?     It  is  well  to 
keep  in  mind  the  fact  that  the  defendant  is  a  public  common 
carrier.     At  common  law  a  public  or  common  carrier  is  bound 
to  accept  and  carry  for  all  upon  being  paid  a  reasonable  com- 
pensation.   (The  fact  that  the  charge  is  less  for  one  than  another 
is  only  evidence  to  show  that  a  particular  charge  is  unreasonable. 
In   Story  on   Bailments,    §    5.08,  note   3,  it  is  said:     '|There  is 
nothing  in  the  common  law  to  hinder  a  carrier  from  carrying 
for   favored   individuals    at   an   unreasonably   low   rate,    or   even 
gratis."  ]  And  in  1  Wood,  Ey.  Law,  566,  it  is  said :     "(A  mere  dis- 
crimination in  favor  of  a  customer  is  not  unlawful  unless  it  is  an 
unjust  discrimination.'^     In  volume   2,   p.   95,  Eedf.   E.  E.,  the 
following  language  is  used:     "It  has  been  held  in  this  country, 
where  there  is  no  statutory  regulation  affecting  the  question,  that 
common  carriers  are  not  absolutely  bound  to  charge  all  customers 
the  same  price  for  the  same  service.     But  as  the  rule  is  clearly 
established  at  common  law  that  a  carrier  is  bound  by  law  to  carry 
everything  which  is  brought  to  him,  for  a  reasonable  sum  to  be 
paid  to  him  for  the  same  carriage,  and  not  to  extort  what  he 
will,  it  would  seem  to  follow  that  he  is  bound  to  carry  for  all 
at  the  same  price,  unless  there  is  some  special  reason  for  the  dis- 
tinction.    For,   unless   this   were  so,   the   duty   to    carry   for   all 
would  not  be  of  much  value  to  the  public,  since  it  would  be  easy 
for  the  carrier  to  select  his  own  customers  at  will  by  the  arbitrary 
discrimination  in  his  prices.     Hence,  it  was  held  at  an  early  day 
that  all  that  could  be  required  on  the  part  of  the  owner  of  the 
goods,  by  way  of  compensation,  was  that  he  should  be  ready  and 
willing  to  pay  a  reasonable  compensation,  and  to  deposit  the  money 
in   advance,   if   required.     Carrying   for   reasonable   compensation 
must  imply  that  the  same  compensation  is  accepted  always  for 


DISCRIMINATION.  343 

the  same  service,  else  it  could  not  be  reasonable,  either  absolutely 
or  relatively."  In  Hutchinson  on  Carriers,  243,  after  a  review  of 
the  cases,  it  is  said :  "  Hence  we  may  conclude  that  in  this  coun- 
try, independently  of  statutory  provisions,  all  common  carriers  will 
be  held  to  the  strictest  impartiality  in  the  conduct  of  their  business, 
and  that  all  privileges  or  preferences  given  to  one  customer,  which 
are  not  extended  to  all,  are  in  violation  of  public  duty."  An 
examination  of  the  authorities  cited  by  these  learned  authors 
leaves  no  doubt  that  a  common  carrier  has  no  right  to  make  un- 
reasonable charges  for  his  services,  and  that  he  cannot  lawfully 
make  unjust  discrimination  between  his  customers.  It  is  strenu- 
ously contended  by  counsel  for  appellant  that  it  is  not  charged  in 
the  petition  as  a  substantial  fact  that  the  rate  charged  the  plaintiffs 
was  unreasonable.  Lit  is  distinctly  averred  that  the  rate  charged 
the  plaintiffs  "  was  unreasonable,  and  is  and  was  an  unjust  dis- 
crimination."J  This  appears  to  us  to  be  a  sufficient  answer  to 
the  argument  of  counsel  to  the  effect  that  the  action  is  founded 
solely  upon  the  fact  of  mere  difference  in  rates.  It  appears  to  be 
conceded  that  the  defendant  had  no  right  to  exact  unreasonable 
rates  or  to  make  unjust  discriminations  between  shippers  which  in 
effect  compels  one  shipper  to  pay  an  unreasonable  rate. 

The  above  principles  of  law  may  be  said  to  be  fundamental,  and  it 
is  only  necessary  to  apply  the  facts  to  reach  the  conclusion  that  the 
rates  paid  by  the  plaintiffs  were  unreasonable  and  unjust  discrimina- 
tion. It  is  not  claimed  that  the  favored  shippers  were  objects  of  the 
charity  of  the  defendant.  The  payment  of  the  rebates  cannot  be 
designated  as  "  alms  giving."  It  does  not  appear  that  the  con- 
cessions were  made  because  the  favored  shippers  furnished  more 
shipments  than  the  plaintiffs.  The  fact  is  that  some  of  the  others 
shipped  less  than  the  plaintiffs,  ^n  short  there  is  no  reason  for 
the  discrimination.  It  is  true  that  it  is  claimed  that  the  rebate 
shippers  bought  cattle  and  hogs  from  territory  in  which  shipments 
would  ordinarily  be  made  upon  other  railroads,  but  the  evidence 
shows  that  the  plaintiffs'  field  of  operation  was  about  the  same 
as  the  other  shippers-'/  It  does  not  appear  that  the  rebates  were 
allowed  merely  at  times  when  there  were  cut  rates  or  a  war  of 
rates  between  the  defendant  and  rival  railroad  lines.  'The  rebates 
were  paid  regularly  for  years,  with  but  short  intervals^  Is  it  to 
be  supposed  that  any  court  or  jury  under  this  state  of  facts  would 
solemnly  find,  declare,  and  adjudge  that,  after  paying  the  rebate, 
the  defendant  did  not  have  a  reasonable  compensation  for  the 
service?  The  only  finding  that  can  in  any  fairness  be  made  is 
that,  after  deducting  the  rebate,  the  rate  was  reasonable;  and 
that  the  exaction  from  the  plaintiffs  was  unreasonable,  and  the 


344  DISCKIMINATIOX.  [CHAP.    V. 

discrimination  against  them  unjust.  ^And  the  fact  that  it  was 
secretly  done,  and  that  it  appeared  to  oe  necessary  to  carry  it  on 
by  lying  and  deceit,  surely  does  not  tend  to  commend  such  a  course 
of  dealing  to  fair-minded  men. )  We  have  been  cited  to  a  number 
of  adjudged  cases,  by  counseV  for  the  respective  parties,  and  we 
think  we  may  safely  say  that  not  one  of  them  is  in  conflict  with 
the  views  we  have  herein  expressed  upon  this  question.  On  the 
contrary,  and  in  support  of  our  conclusion,  see  Sharpless  v.  Mayor, 
21  Pa.  St.  147 ;  New  England  Exp.  Co.  v.  Maine  Cent.  E.  Co.,  57 
Me.  188;  McDuffee  v.  Eailway  Co.,  52  N.  H.  430;  Messenger  v. 
Eailway  Co.,  36  N.  J.  Law,  407. 


STATE  ex  rel.  ATWATEE  v.  DELAWAEE,  LACKAWANNA 
AND  WESTEEN  EAILEOAD  CO. 

48  N.  J.  L.  55.     1886.* 

The  relator,  an  attorney  and  counselor-at-law,  practicing  his 
profession  in  the  city  of  New  York,  resides  at  East  Orange,  in 
this  state.  He  testified  that  he  is  permanently  residing  at  that 
place,  having  resided  there  since  August,  1884,  occupying  a  rented 
house,  the  present  lease  of  which  expires  May  1st,  1886.  East 
Orange  is  on  the  line  of  the  Delaware,  Lackawanna  and  Western 
Eailroad,  the  only  railroad  between  East  Orange  and  New  York 
City.  The  regular  fare  between  East  Orange  and  New  York  City 
is  twenty-six  cents  for  a  single  ticket,  and  fifty  cents  for  an  ex- 
cursion ticket.  Monthly  commutation  tickets,  such  as  the  com- 
pany is  accustomed  to  sell  to  persons  who  apply  for  them,  are 
sold  at  the  rate  of  $6.50. 

Until  March,  1885,  the  relator  was  a  commuter,  purchasing 
monthly  tickets  at  commutation  rates.  On  the  28th  of  February, 
1885,  the  relator  applied  to  the  company's  agent,  whose  business 
it  was  to  sell  tickets  of  that  class,  for  a  commutation  ticket  for  the 
ensuing  month  of  March,  and  tendered  the  price  of  the  ticket. 
The  agent  refused  to  sell  relator  a  ticket,  and  assigned  as  his 
reason  therefor  that  he  had  received  instructions  not  to  sell  the 
relator  commutation  tickets.  The  relator,  on  the  1st  of  March, 
applied  again  for  the  ticket,  and  was  again  refused. 

The  opinion  of  the  court  was  delivered  by 

Depue,  J.  The  Morris  and  Essex  Eailroad  Company  was  in- 
corporated in  1835,  to  construct  a  railroad  for  the  purpose  of 
carrying  passengers  and  freight.  The  charter  authorized  the  com- 
pany to  charge  for  the  carriage  of  passengers  and  freight,  and  pre- 

1  Part  of  the  statement  of  facts  and  part  of  the  opinion  are  omitted. —  Ed. 


DISCRIMINATION.  345 

scribed  the  limits  of  the  rates  to  be  charged  per  ton  for  the  trans- 
portation of  freight,  and  per  mile  for  the  carriage  of  passengers. 
Pamph.  L.,  1835,  p.  29,  §  10.  In  virtue  of  its  charter  rights  and 
privileges  the  company  became  a  common  carrier  of  passengers  and 
freight.  By  legislative  authority  the  Delaware,  Lackawanna  and 
Western  Eailroad  Company,  as  lessee  of  the  company's  railroad, 
was  invested  with  its  franchises,  rights  and  privileges  (Pamph. 
L.,  1869,  p.  28),  subject,  of  course,  to  all  the  obligations  and  duties 
resting  on  the  lessor. 

At  this  day  it  would  be  superfluous  to  enter  upon  a  discussion 
to  support  the  doctrine,  so  well  settled,  that  common  carriers  are 
public  agents,  transacting  their  business  under  an  obligation  to 
observe  equality  towards  every  member  of  the  community,  to  serve 
all  persons  alike,  without  giving  any  unjust  or  unreasonable  ad- 
vantages by  way  of  facilities  for  the  carriage  or  rates  for  trans- 
porting them.  1  Wood  on  Railways,  §  195.  The  leading  case 
on  this  subject  is  Messenger  v.  Pennsylvania  R.  E.  Co.,  reported 
as  decided  in  the  Supreme  Court  in  7  Vroom  407,  and  in  the 
Court  of  Errors  in  8  Id.  531.  In  his  opinion  in  the  Supreme 
Court,  Chief  Justice  Beasley  says :  "  It  was  one  of  the  primary 
obligations  of  the  common  carrier  to  receive  and  carry  all  goods 
offered  for  transportation  upon  receiving  a  reasonable  hire.  .  .  . 
Thus,  in  the  very  foundation  and  substance  of  the  business  there 
was  inherent  a  rule  which  excluded  a  preference  of  one  consignor 
of  goods  over  another.  .  .  .  Recognizing  this  as  the  settled  doc- 
trine, I  do  not  see  how  it  can  be  admissible  for  a  common  carrier 
to  demand  a  different  hire  from  various  persons  for  an  identical 
kind  of  service  under  identical  conditions.  .  .  .(A  person  having 
a  public  duty  to  discharge  is  undoubtedly  bound  to  exercise  such 
office  for  the  equal  benefit  of  all,  and  therefore  to  permit  a  common 
carrier  to  charge  various  prices,  according  to  the  person  with  whom 
he  deals,  for  the  sarae  services,  is  to  forget  that  he  owes  a  duty 
to  the  community."^  On  affirmance  of  this  case  the  Court  of 
Errors  was  equally  emphatic  in  affirming  the  doctrine  that  a  com- 
mon carrier  owes  an  equal  duty  to  all,  which  is  not  discharged  if 
unequal  preferences  are  made,  and  the  enjoyment  of  the  common 
right  is  thereby  prevented  or  impaired.  How  uniformly  the  doc- 
trine of  this  case  has  been  adopted  and  applied,  will  be  seen  by  the. 
citations  and  extracts  from  opinions  of  the  courts  of  our  sister 
states  given  by  Mr.  Justice  Atherton,  in  his  opinion  in  the  recent 
case  of  Scofield  v.  Lake  Shore  and  Michigan  S.  R.  R.  Co.,  as  re- 
ported in  1  West.  Rep.  821-831.  A  collection  of  cases  illustrative 
of  the  application  of  the  same  principle  to  railroad,  express,  tele- 
graph, gas  and  water  companies  will  be  found  in  a  note  to  B.  & 


346  DISCRIMINATIOX.  [CHAP.   V. 

0.  Tel.  Co.  V.  Bell  Telephone  Co.,  24  Am.  Law  Reg.  (N.  S.)  578. 

There  is  also  a  considerable  line  of  cases  holding  that  the  carrier 
may  discriminate  in  the  rates  charged  for  the  transportation  of 
different  classes  of  goods,  or  in  favor  of  persons  shipping  large 
quantities  of  freight,  or  in  favor  of  the  long  distances  for  which 
freight  is  carried  as  against  shorter  distances,  or  upon  grounds 
which  would  reduce  the  trouble  or  cost  of  carrying  for  one  party 
as  compared  with  another.  Some  of  these  cases  were  decided  on 
the  "  equality  clauses  "  in  the  English  statutes,  which  our  courts 
have  held  to  be  merely  declaratory  of  the  common  law.  Others 
were  decided  upon  common  law  principles,  without  any  statutory 
regulation  of  the  subject.  An  examination  of  cases  of  this  class 
will  show  that  the  common  law  obligation  of  common  carriers  to 
deal  with  all  persons  on  an  equality  is  tacitly  if  not  expressly 
recognized;  for  such  discriminations  have  been  upheld  only  where, 
under  the  same  circumstances  and  for  the  same  class  of  goods,  the 
same  rates  would  be  charged  to  all,  or  the  discrimination,  if  made 
under  special  circumstances,  appeared  to  be  just  and  reasonable. 
Eansome  v.  E.  C.  E.  R.  Co.,  1  C.  B.  (N.  S.)  437;  4  Id.  135;  In 
re  Caterham  Railway,  1  C.  B.  (N.  S.)  410;  In  re  Oxlade,  Id. 
454;  Baxendale  v.  G.  W.  R.  R.  Co.,  5  C.  B.  (N.  S.)  309;  Same  v. 
Same,  5  Id.  336,  354;  Nicholson  v.  G.  W.  R.  R.  Co.,  Id.  366; 
Garton  v.  G.  W.  R.  R.  Co.,  Id.  669 ;  Garton  v.  B.  &  E.  R.  R.  Co., 
6  C.  B.  (N.  S.)  639;  Baxendale  v.  E.  C.  R.  R.  Co.,  4  Id.  63;  Ever- 
shed  V.  L.  &  G.  W.  R.  R.  Co.,  L.  R.,  2  Q.  B.  Div.  254,  267;  Crouch 
V.  L.  &  W.  R.  R.  Co.,  2  C.  &  K.  789,  804;  1  Wood  on  Railways, 
§§  197,  198;  3  Id.  496;  Stewart  v.  L.  V.  R.  R.  Co.,  9  Vroom  505, 
520.  And  it  is  indisputable  that  where  the  carrier  has  a  fixed 
schedule  of  rates  for  carriage  for  the  public  generally,  a  demand 
from  one  person  of  a  higher  rate  for  the  same  service  would  be 
unlawful,  although  the  rate  demanded  was  less  than  its  charter 
allowed;  for  such  an  incorporated  company  has  the  double  duty 
to  keep  within  the  limit  of  charges  prescribed  by  its  charter,  and 
also  to  conform  to  that  common  law  obligation  to  observe  equality  in 
charges  with  respect  to  all  which  the  law  of  the  land  lays  upon 
the  business  for  which  it  was  incorporated. 

The  principle  above  stated  is  applicable  to  the  case  in  hand.  In 
virtue  of  the  charter  under  which  the  company  transacts  its  business 
it  is  a  common  carrier  of  passengers  as  well  as  of  goods,  and  in 
that  capacity  is  obliged  to  carry  all  passengers  who  are  ready  to 
pay  for  their  transportation,  and  liable  to  an  action  at  the  suit  of 
any  one  whom  it  refuses  to  carry  without  lawful  excuse.  Story 
on  Bailm.,  §  591;  Bennett  v.  Button,  10  N.  H.  481;  Jencks  v. 
Coleman,  2  Sumn.  221;  Benett  v.  P.  &  0.  Steamboat  Co.,  6  C.  B. 


DISCRIMINATION.  347 

775 ;  Beekman  v.  S.  &  S.  E.  E.  Co.,  3  Paige  45.  And,  as  was  said 
by  the  court  in  the  Messenger  case,  in  virtue  of  its  charter  rights 
and  privileges,  the  company  is  a  public  agent,  and  as  such  agent 
is  placed  under  a  duty  to  exercise  its  calling  with  perfect  impar- 
tiality towards  all  persons.  Carrying  passengers  upon  commutation 
tickets  at  less  rates  than  the  charges  for  single  tickets  has  become 
a  usual  mode  with  railroad  companies  in  prosecuting  the  carrying 
business.  It  is  a  mode  of  transacting  business  of  substantial 
benefit  to  those  who  are  able  to  avail  themselves  of  the  privilege, 
and  at  the  same  time  is  greatly  conducive  to  the  growth  and  pros- 
perity of  parts  of  the  state  lying  adjacent  to  the  large  cities.  In- 
deed, a  considerable,  if  not  a  greater  part  of  the  passenger  carry- 
ing business  in  localities  contiguous  to  the  great  business  centres 
of  the  country  is  transacted  under  this  system,  and  the  rental  and 
market  value  of  lands  in  such  localities  is  largely  determined  by 
the  ability  to  procure  transportation  at  reduced  commutation  rates. 
The  denial  of  this  privilege  to  a  particular  individual  is  to  him  a 
substantial  injury.  (A  company  is  under  no  obligation  to  establish 
commutation  rates  for  a  particular  locality,  but  when  it  has  es- 
tablished such  rates,  and  commutation  tickets  are  sold  thereat  to  the 
public,  the  refusal  of  such  a  ticket  to  a  particular  individual,  under 
the  same  circumstances,  and  upon  the  same  conditions  as  such 
tickets  are  sold  to  the  rest  of  the  public,  is  an  unjust  discrimina- 
tion against  him,  and  a  violation  of  the  principle  of  equalitY 
which  the  company  is  bound  to  observe  in  the  conduct  of  its  business-/ 
There  is  not  a  perceptible  shade  of  difference  between  the  denial 
of  a  commutation  ticket  under  such  circumstances,  and  the  refusal 
to  sell  the  same  individual  an  ordinary  ticket  at  the  customary  rate, 
and  demanding  of  him  for  transportation  the  utmost  price  allowed 
in  the  company's  charter  in  excess  of  the  usual  price  at  which  such 
tickets  are  sold  to  the  public,  and  such  a  denial  cannot  be  made 
to  square  with  the  principles  laid  down  and  emphasized  in  the 
Messenger  case.^ 

INTEESTATE  COMMEECE  COMMISSION  v.  BALTIMOEE 
AND  OHIO  EAILEOAD  CO. 

145  U.  S.  263.     1892.^ 

Mr.  Justice  Brown,  after  stating  the  facts,  delivered  the  opin- 
ion of  the  court. 

2  See  that  part  of  Scofield  v.  Railway  Co.  (1885),  43  Oh.  St.  571,  not  re- 
printed infra,  p.  352. 

1  The  statement  of  facts,  arguments  of  counsel  and  part  of  the  opinion 
are  omitted. —  Ed. 


348  DISCRIMINATION.  [CHAP.   V. 

Prior  to  the  enactment  of  the  act  of  February  4,  1887  (24  St. 
p.  379),  to  regulate  commerce,  commonly  known  as  the  "Inter- 
state Commerce  Act,"  railway  traffic  in  tliis  country  was  regulated 
by  the  principles  of  the  common  law  applicable  to  common  car- 
riers, which  demanded  little  more  than  that  they  should  carry  for 
all  persons  who  applied,  in  the  order  in  which  the  goods  were 
delivered  at  the  particular  station,  and  that  their  charges  for 
transportation  should  be  reasonable.  It  was  even  doubted  whether 
they  were  bound  to  make  the  same  charge  to  all  persons  for  the 
same  service, —  Fitchburg  Eailroad  Co.  v.  Gage,  13  Gray,  393 ;  Bax- 
endale  v.  Railway  Co.,  4  C.  B.  (N.  S.)  63;  Railway  Co.  v.  Sutton, 
L.  R.  4  H.  L.  226,  237 ;  Ex  parte  Benson,  18  S.  C.  385 ;  Johnson  v. 
Railway  Co.,  16  Fla.  623, —  though  the  weight  of  authority  in  this 
country  was  in  favor  of  an  equality  of  charge  to  all  persons  for 
similar  services.  In  several  of  the  states  acts  had  been  passed  with 
the  design  of  securing  the  public  against  unreasonable  and  unjust 
discriminations;  but  the  inefficacy  of  these  laws  beyond  the  lines 
of  the  state,  the  impossibility  of  securing  concerted  action  between 
the  legislatures  towards  the  regulation  of  traffic  between  the  several 
states,  and  the  evils  which  grew  up  under  a  policy  of  unrestricted 
competition,  suggested  the  necessity  of  legislation  by  congress  under 
its  constitutional  power  to  regulate  commerce  among  the  several 
states.  These  evils  ordinarily  took  the  shape  of  inequality  of 
charges  made,  or  of  facilities  furnished,  and  were  usually  dictated 
by  or  tolerated  for  the  promotion  of  the  interests  of  the  officers  of 
the  corporation  or  of  the  corporation  itself,  or  for  the  benefit  of 
some  favored  persons  at  the  expense  of  others,  or  of  some  particular 
locality  or  community,  or  of  some  local  trade  or  commercial  con- 
nection, or  for  the  destruction  or  crippling  of  some  rival  or  hostile 
line. 

The  principal  objects  of  the  Interstate  Commerce  Act  were  to 
secure  just  and  reasonable  charges  for  transportation;  to  prohibit 
unjust  discriminations  in  the  rendition  of  like  services  under 
similar  circumstances  and  conditions;  to  prevent  undue  or  un- 
reasonable preferences  to  persons,  corporations,  or  localities;  to 
inhibit  gi-eater  compensation  for  a  shorter  than  for  a  longer  dis- 
tance over  the  same  line ;  and  to  abolish  combinations  for  the  pool- 
ing of  freights.)  It  was  not  designed,  however,  to  prevent  compe- 
tition between'^different  roads,  or  to  interfere  with  the  customary 
arrangements  made  by  railway  companies  for  reduced  fares  in 
consideration  of  increased  mileage,  where  such  reduction  did  not 
operate  as  an  unjust  discrimination  against  other  persons  traveling 
over  the  road.  In  other  words,  it  was  not  intended  to  ignore  tjie 
principle  that  one  can  sell  at  wholesale  cheaper  than  at  retail.  /It 


DISCRIMINATION.  349 

is  not  all  discriminations  or  preferences  that  fall  within  the  in^ 
hibition  of  the  statute, —  only  such  as  are  unjust  or  unreasonablej 
For  instance,  it  would  be  obviously  unjust  to  charge  A.  a  greater 
sum  than  B.  for  a  single  trip  from  Washington  to  Pittsburgh; 
but,  if  A.  agrees  not  only  to  go,  but  to  return  by  the  same  route, 
it  is  no  injustice  to  B.  to  permit  him  to  do  so  for  a  reduced  fare, 
since  the  services  are  not  alike,  nor  the  circumstances  and  con- 
ditions substantially  similar,  as  required  by  section  2  to  make  an 
unjust  discrimination.  Indeed,  the  possibility  of  just  discrimina- 
tions and  reasonable  preferences  is  recognized  by  these  sections, 
in  declaring  what  shall  be  deemed  unjust.  We  agree,  however,  with 
tlie  plaintiff  in  its  contention  that  a  charge  may  be  perfectly  rea- 
sonable under  section  1,  and  yet  may  create  an  unjust  discrimina- 
tion or  an  unreasonable  preference  under  sections  3  and  3.  As 
was  said  by  Mr.  Justice  Blackburn  in  Eailway  Co.  v.  Sutton,  L. 
E.  4  H.  L.  226,  239:  "When  it  is  sought  to  show  that  the 
charge  is  extortionate,  as  being  contrary  to  the  statutable  obliga- 
tion to  charge  equally,  it  is  immaterial  whether  the  charge  is 
reasonable  or  not;  it  is  enough  to  show  that  the  company  carried 
for  some  other  person  or  class  of  persons  at  a  lower  charge  during 
the  period  throughout  which  the  party  complaining  was  charged 
more  under  the  like  circumstances." 

The  question  involved  in  this  case  is  whether  the  principle  above 
stated,  as  applicable  to  two  individuals,  applies  to  the  purchase 
of  a  single  ticket  covering  the  transportation  of  10  or  more  persons 
from  one  place  to  another.  These  are  technically  known  as  party 
rate  tickets,  and  are  issued  principally  to  theatrical  and  operatic 
companies  for  the  transportation  of  their  troupes^  Such  ticket 
is  clearly  neither  a  "  mileage  "  nor  an  "  excursion  "  ticket  within 
the  exception  of  section  22 ;  and  upon  the  testimony  in  this  case 
it  may  be  doubtful  whether  it  falls  within  the  definition  of  "  com- 
mutation tickets,"  as  those  words  are  commonly  understood  among 
railway  officials.  The  words  "  commutation  ticket "  seem  to  have 
no  definite  meaning.  They  are  defined  by  Webster  (edition  of 
1891)  as  "a  ticket,  as  for  transportation,  which  is  the  evidence 
of  a  contract  for  service  at  a  reduced  rate."  If  this  definition  be 
applicable  here,  then  it  is  clear  that  it  would  include  a  party  rate 
ticket.  In  the  language  of  the  railway,  however,  they  are  prin- 
cipally, if  not  wholly,  used  to  designate  tickets  for  transportation 
during  a  limitedytime  between  neighboring  towns,  or  cities  and 
suburban  towns.  rThe  party  rate  ticket  upon  the  defendant's  road 
is  a  single  ticket,  issued  to  a  party  of  10  or  more,  at  a  fixed  rate 
of  2  cents  per  mile,  or  a  discount  of  one  third  from  the  regular 
passenger  ratej    The  reduction  is  not  made  by  way  of  a  secret 


350  DISCRIMINATION.  [CHAP.   V. 

rebate  or  drawback,  but  the  rates  are  scheduled,  posted,  and  open 
to  the  public  at  large. 

But,  assuming  the  weight  of  evidence  in  this  case  to  be  that 
the  party  rate  ticket  is  not  a  "  commutation  ticket,"  as  that  word 
was  commonly  understood  at  the  time  of  the  passage  of  the  act, 
but  is  a  distinct  class  by  itself,  it  does  not  necessarily  follow  that 
such  tickets  are  unlawful.  The  unlawfulness  defined  by  sections 
2  and  3  consists  either  in  an  "  unjust  discrimination  "  or  an  "  un- 
due or  unreasonable  preference  or  advantage,"  and  the  object  of 
section  22  was  to  settle  beyond  all  doubt  that  the  discrimination  in 
favor  of  certain  persons  therein  named  should  not  be  deemed  un- 
just. It  does  not  follow,  however,  that  there  may  not  be  other 
classes  of  persons  in  whose  favor  a  discrimination  may  be  made 
without  such  discrimination  being  unjust.  In  other  words,  this 
section  is  rather  illustrative  than  exclusive.  Indeed,  many,  if  not 
all,  the  excepted  classes  named  in  section  22  are  those  which,  in 
the  absence  of  this  section,  would  not  necessarily  be  held  the  sub- 
jects of  an  unjust  discrimination,  if  more  favorable  terms  were 
extended  to  them  than  to  ordinary  passengers.  Such,  for  instance, 
are  property  of  the  United  States,  state,  or  municipal  governments ; 
destitute  and  homeless  persons  transported  free  of  charge  by  char- 
itable societies;  indigent  persons  transported  at  the  expense  of 
municipal  governments;  inmates  of  soldiers'  homes  etc.,  and  min- 
isters of  religion, —  in  favor  of  whom  a  reduction  of  rates  had  been 
made  for  many  years  before  the  passage  of  the  act.  It  may  even 
admit  of  serious  doubt  whether,  if  the  mileage,  excursion,  or  com- 
mutation tickets  had  not  been  mentioned  at  all  in  this  section, 
they  would  have  fallen  within  the  prohibition  of  sections  2  and  3 ; 
in  other  words,  whether  the  allowance  of  a  reduced  rate  to  persons 
agreeing  to  travel  1,000  miles,  or  to  go  and  return  by  the  same 
road,  is  a  "like  and  contemporaneous  service  under  substantially 
similar  conditions  and  circumstances"  as  is  rendered  to  a  person 
who  travels  upon  an  ordinary  single  trip  ticket.  If  it  be  so,  then, 
under  state  laws  forbidding  unjust  discriminations,  every  such 
ticket  issued  between  points  within  the  same  state  must  be  illegal. 
In  view  of  the  fact,  however,  that  every  railways  company  issues 
such  tickets;  that  there  is  no  reported  case,  state  or  federal, 
wherein  their  legality  has  been  questioned;  that  there  is  no  such 
case  in  England ;  and  that  the  practice  is  universally  acquiesced  in  by 
the  public, —  it  would  seem  that  the  issuing  of  such  tickets  should 
not  be  held  an  unjust  discrimination  or  an  unreasonable  preference 
to  the  persons  traveling  upon  them. 

But,  whether  these  party  rate  tickets  are  commutation  tickets 
proper,  as  known  to  railway  officials,  or  not,  they  are  obviously 


DISCKIMINATION".  351 

within  the  commuting  principle..  As  stated  in  the  opinion  of  Judge 
Sage  in  the  court  below:  "The  difference  between  commuta- 
tion and  party  rate  tickets  is  that  commutation  tickets  are  issued 
to  induce  people  to  travel  more  frequently,  and  party  rate  tickets 
are  issued  to  induce  more  people  to  traveV  There  is,  however, 
no  difference  in  principle  between  them,  the  object  in  both  cases 
being  to  increase  travel  without  unjust  discrimination,  and  to  secure 
patronage  that  would  not  otherwise  be  secured." 

The  testimony  indicates  that  for  many  years  before  the  passage 
of  the  act  it  was  customary  for  railroads  to  issue  tickets  at  re- 
duced rates  to  passengers  making  frequent  trips,  trips  for  long 
distances,  and  trips  in  parties  of  10  or  more,  lower  than  the  regular 
single  fare  charged  between  the  same  points;  and  such  lower  rates 
were  universally  made  at  the  date  of  the  passage  of  the  act.  As 
stated  in  the  answer  to  meet  the  needs  of  the  commercial  traveler, 
the  1,000-mile  ticket  was  issued;  to  meet  the  needs  of  the  suburban 
resident  or  frequent  traveler,  several  forms  of  tickets  were  issued. 
For  example,  monthly  or  quarterly  tickets,  good  for  any  number  of 
trips  within  the  specified  time;  and  10,  25  or  50  trip  tickets,  good 
for  a  specified  number  of  trips  by  one  person,  or  for  one  trip  by 
a  specified  number  of  persons;  to  accommodate  parties  of  10  or 
more,  a  single  ticket,  one  way  or  round  trip,  for  the  whole  party, 
was  made  up  by  the  agent  on  a  skeleton  form  furnished  for  that 
purpose;  to  accommodate  excursionists  traveling  in  parties  too 
large  to  use  a  single  ticket,  special  individual  tickets  were  issued 
to  each  person,  iflickets  good  for  a  specified  number  of  trips  were 
also  issued  between  cities  where  travel  was  frequent.  In  short,  it 
was  an  established  principle  of  the  business  that  whenever  the 
amount  of  travel  more  than  made  up  to  the  carrier  for  the  reduc- 
tion of  the  charge  per  capita,  then  such  reduction  was  reasonabla 
and  just  in  the  interests  both  of  the  carrier  and  of  the  public-.- 
Although  the  fact  that  railroads  had  long  been  in  the  habit  of 
issuing  these  tickets  would  be  by  no  means  conclusive  evidence  that 
they  were  legal,  since  the  main  purpose  of  the  act  was  to  put  an 
end  to  certain  abuses  which  had  crept  into  the  management  of 
railroads,  yet  congress  may  be  presumed  to  have  had  those  prac- 
tices in  view,  and  not  to  have  designed  to  interfere  with  them, 
except  so  far  as  they  were  unreasonable  in  themselves,  or  unjust 
to  others.  I  These  tickets,  then,  being  within  the  commutation 
principle  of  allowing  reduced  rates  in  consideration  of  increased 
mileage,  the  real  question  is  whether  this  operates  as  an  undue  or 
unreasonable  preference  or  advantage  to  this  particular  description 
of  traffic,  or  an  unjust  discrimination  against  othersJ  If,  for  ex- 
ample, a  railway  makes  to  the  public  generally  a  certain  rate  of , 


352  DISCRIMINxVTION.  [CHAP.    V. 

freight,  and  to  a  particular  individual  residing  in  the  same  town 
a  reduced  rate  for  the  same  class  of  goods,  this  may  operate  as 
an  undue  preference,  since  it  enables  the  favored  party  to  sell  his 
goods  at  a  lower  price  than  his  competitors,  and  may  even  enable 
him  to  obtain  a  complete  monopoly  of  that  business.  Even  if  the 
same  reduced  rate  be  allowed  to  every  one  doing  the  same  amount 
of  business,  such  discrimination  may,  if  carried  too  far,  operate 
unjustly  upon  the  smaller  dealers  engaged  in  the  same  business, 
and  enable  the  larger  ones  to  drive  them  out  of  the  market. 

The  same  result,  however,  does  not  follow  from  the  sale  of  a 
ticket  for  a  number  of  passengers  at  a  less  rate  than  for  a  single 
passenger;  it  does  not  operate  to  the  prejudice  of  the  single  pas- 
senger, who  cannot  be  said  to  be  injured  by  the  fact  that  another  is 
able  in  a  particular  instance  to  travel  at  a  less  rate  than  he.  ! 

I  In  order  to  constitute  an  unjust  discrimination  under  section  2 
tne  carrier  must  charge  or  receive  directly  from  one  person  a 
greater  or  less  compensation  than  from  another,  or  must  accomplish 
the  same  thing  indirectly  by  means  of  a  special  rate,  rebate,  or 
other  device ;  but,  in  either  case,  it  must  be  for  a  "  like  and  con- 
temporaneous service  in  the  transportation  of  a  like  kind  of  traffic, 
under  substantially  similar  circumstances  and  condition^."  To 
bring  the  present  case  within  the  words  of  this  section,  we  must 
assume  that  the  transportation  of  ten  persons  on  a  single  ticket 
is  substantially  identical  with  the  transportation  of  one,  and,  in 
view  of  the  universally  accepted  fact  that  a  man  may  buy,  contract, 
or  manufacture  on  a  large  scale  cheaper  proportionately  than  upon 
a  small  scale,  this  is  impossible. 

Upon  the  whole,  we  are  of  the  opinion  that  party  rate  tickets, 
as  used  by  the  defendant,  are  not  open  to  the  objections  found 
by  the  Interstate  Commerce  Commission,  and  are  not  in  violation  of 
the  act  to  regulate  commerce,  and  the  decree  of  the  court  below  is 
therefore  affirmed. 


SCOFIELD  V.  LAKE  SHORE  AND  MICHIGAN  SOUTHERN 
RAILWAY  CO. 

43  Oh.  St.  571.     1885.^ 

The  plaintiffs,  Scofield,  Shurmer  &  Teagle,  filed  their  petition 
in  the  court  of  common  pleas,  and  therein  alleged,  in  substance, 
that  since  1875  they  have  been  manufacturers  of  and  dealers  in 
refined  and  other  products  of  petroleum  at  Cleveland.     That  dur- 

1  Only  an  extract  from  the  statement  of  facts  and  an  extract  from  the 
opinion  are  here  reprinted. —  Ed. 


DISCRIMINATION.  353 

ing  the  same  time  the  Standard  Oil  Company  was  largely  engaged 
in  the  same  business.  That  defendant,  The  Lake  Shore  and 
Michigan  Southern  Eailway  Company,  was  the  owner  of  a  line  of 
railroad  passing  through  Cleveland,  and  extending  from  Buffalo, 
New  York,  to  Chicago,  Illinois,  with  branches  to  Detroit  and 
Grand  Eapids,  in  Michigan.  That  it  was  amply  supplied  with 
proper  equipment  to  receive  and  carry  the  product  of  plaintiffs. 
That  it  made  and  published  tariff  rates  for  the  transportation  of. 
oil  in  barrels,  which  plaintiffs  were  at  all  times  charged,  in  com- 
mon with  all  other  manufacturers  in  Cleveland  except  the  Stan- 
dard Oil  Company,  which  plaintiffs  say  was  largely  in  excess  of  the 
rates  charged  to  and  paid  by  the  Standard  Oil  Company  to  the 
same  points  and  places. 

Atherton,  J.  The  case  of  Hays  v.  Pennsylvania  Company,  12 
Ted.  Rep.  309,  decided  by  Baxter,  J.,  in  the  circuit  court  of  the 
United  States,  for  the  northern  district  of  Ohio,  is  important  in 
respect  to  one  element  in  this  case.  The  defendant  in  the  case 
at  bar  claims  that  it  was  proper  to  enter  into  the  contract  it  did 
with  the  Standard  Oil  Company,  on  account  of  the  very  large 
amount  of  freightage  that  company  annually  furnishes,  and  that  it 
was  lawful  to  discriminate  in  their  favor  on  that  account.  The 
plaintiffs  in  that  case  had  been  engaged  for  several  years  in  min- 
ing and  shipping  coal  from  Salineville,  and  the  defendant's  railroad 
furnished  them  their  only  means  of  getting  their  coal  to  market. 
The  railroad  company  discriminated  in  favor  of  every  shipper  who 
shipped  five  thousand  tons  or  over,  and  the  discrimination  was 
from  thirty  to  seventy  cents  per  ton,  graduated  by  the  amount 
shipped. 

Plaintiffs  were  required  to  and  did  under  the  discrimination  pay 
a  higher  rate  than  their  more  favored  competitors.  They  brought 
suit  to  recover  for  the  discrimination,  and,  under  the  instructions 
of  the  trial  judge,  the  jury  returned  a  verdict  for  plaintiffs. 

The  judge  on  a  motion  for  a  new  trial  said : 

"  The  defendant  is  a  common  carrier  by  rail.  Its  road,  though 
owned  by  the  corporation,  was  nevertheless  constructed  for  public 
uses,  and  is,  in  a  qualified  sense,  a  public  highway.  Hence  every- 
body constituting  a  part  of  the  public,  for  whose  benefit  it  was 
authorized,  is  entitled  to  an  equal  and  impartial  participation  in 
the  use  of  the  facilities  it  is  capable  of  affording.  .  .  . 

"  The  discrimination  complained  of  rested  exclusively  on  the 
amount  of  freight  supplied  by  the  respective  shippers  during  the 
year.  Ought  a  discrimination  resting  exclusively  on  such  a  basis 
to  be  sustained?  If  so,  then  the  business  of  the  country  is  in 
some  degree  subject  to  the  will  of  railroad  officials ;  for  if  one  man 


354  DISCEIMINATION.  [CHAP.    V. 

engaged  in  mining  coal,  and  dependent  on  the  same  railroad  for 
transportation  to  the  same  market,  can  obtain  transportation  thereof 
at  from  twenty-five  to  fifty  cents  per  ton  less  than  another  compet- 
ing with  him  in  business,  solely  on  the  ground  that  he  is  able  to 
furnish,  and  does  furnish,  the  larger  quantity  for  shipment,  the 
small  operator  will,  sooner  or  later,  be  forced  to  abandon  the  un- 
equal contest,  and  surrender  to  his  more  opulent  rival.  If  the 
principle  is  sound  in  its  application  to  rival  parties  engaged  in 
mining  coal,  it  is  equally  applicable  to  merchants,  manufacturers, 
millers,  dealers  in  lumber  and  grain,  and  to  everybody  else  inter- 
ested in  any  business  requiring  any  considerable  amount  of  trans- 
portation by  rail;  and  it  follows  that  the  success  of  all  such  enter- 
prises would  depend  as  much  on  the  favor  of  railroad  officials 
as  upon  the  energies  and  capacities  of  the  parties  prosecuting  the 
same.  It  is  not  difficult  with  such  a  ruling  to  forecast  the 
consequences.  The  men  who  control  railroads  would  be  quick  to 
appreciate  the  power  with  which  such  a  holding  would  invest  them, 
and,  it  may  be,  not  slow  to  make  the  most  of  their  opportunities ; 
and,  perhaps,  tempted  to  favor  their  friends  to  the  detriment  of 
their  personal  or  political  opponents;  or  demand  a  division  of  the 
profits  realized  from  such  collateral  pursuits  as  could  be  favored  or 
depressed  by  discriminations  for  or  against  them;  or  else,  seeing 
the  augmented  power  of  capital,  organize  into  overshadowing 
combinations,  and  extinguish  all  petty  competition,  monopolize 
business,  and  dictate  the  price  of  coal  and  every  other  commodity 
to  consumers.  We  say  these  results  might  follow  the  exercise  of 
such  a  right  as  is  claimed  for  railroads  in  this  case.  But  we  think 
no  such  power  exists  in  them;  they  have  been  authorized  for  the 
common  benefit  of  every  one,  and  can  not  be  lawfully  manipulated 
for  the  advantage  of  any  class  at  the  expense  of  any  other.  Capital 
needs  no  such  extraneous  aid.  It  possesses  inherent  advantages 
which  can  not  be  taken  from  it.  But  it  has  no  just  claim,  by 
reason  of  its  accumulated  strength,  to  demand  the  use  of  the  public 
highways  of  the  country,  constructed  for  the  common  benefit  of  all, 
on  more  favorable  terms  than  are  accorded  to  the  humblest  of  the 
land;  and  a  discrimination  in  favor  of  parties  furnishing  the  largest 
quantity  of  freight,  and  solely  on  that  ground,  is  a  discrimination 
in  favor  of  capital,  and  is  contrary  to  a  sound  public  policy,  viola- 
tive of  that  equnlity  of  right  guaranteed  to  every  citizen,  and  a 
wrong  to  the  disfavored  party,  for  which  the  courts  are  competent 
to  give  redress." 

The  district  court,  in  their  finding  IQi/s,  state  that  shipment 
by  the  car-load  was  the  manner  in  which  nearly  all  the  business  was 
done.     That  on  the  request  of  either  party  to  furnish  cars,  the 


DISCRIMINATION.  355 

defendant  had  them  switched  to  the  refineries,  and  after  being 
loaded  were  switched  back  and  placed  on  defendant's  tracks  for 
shipment  on  its  road. 

The  manner  of  making  shipments  for  plaintiffs  and  for  the 
Standard  Oil  Company  was  precisely  the  same,  and  the  only  thing 
to  distinguish  the  business  of  the  one  from  the  other  was  the  aggre- 
gate yearly  amounts  of  freight  shipped.  We  adopt  the  reasoning  of 
Baxter,  J.,  as  the  better  law,  and  hold  that  a  discrimination  in  the 
rate  of  freights  resting  exclusively  on  such  a  basis  ought  not  to  be 
sustained.  The  principle  is  opposed  to  a  sound  public  policy.  It 
would  build  up  and  foster  monopolies,  add  largely  to  the  accumu- 
lated power  of  capital  and  money  and  drive  out  all  enterprise  not 
backed  by  overshadowing  wealth.  With  the  doctrine,  as  contended 
for  by  the  defendant,  recognized  and  enforced  by  the  courts,  what 
will  prevent  the  great  grain  interest  of  the  north-west,  or  the  coal 
and  iron  interests  of  Pennsylvania,  or  any  of  the  great  commercial 
interests  of  the  country,  bound  together  by  the  power  and  influence 
of  aggregated  wealth  and  in  league  with  the  railroads  of  the  land, 
driving  to  the  wall  all  private  enterprises  struggling  for  existence, 
and  with  an  iron  hand  thrusting  back  all  but  themselves? 

The  defendant  can  derive  no  benefit  or  advantage  in  this  case 
from  its  contract  with  the  Standard  Oil  Company,  and  its  dis- 
criminations can  not  be  upheld  because  of  the  existence  of  the 
same.^ 


WIGHT  V.  UNITED  STATES. 

167  U.  S.  512.     1897.^ 

Mr.  Justice  Brewer  delivered  the  opinion  of  the  court. 
It  will  be  observed  that,  in  order  to  induce  Mr.  Bruening  to 
transfer  his  transportation  from  a  competing  road  to  its  own  line, 

2  Compare  Nichalson  v.  Great  W.  R.  R.  Co.  (1858),  5  C.  B.  (N.  S.)  36(5. 

In  Carr  v.  Northern  Pac.  Ry.  Co.  (1901).  9  I.  C.  C.  R.  1,  14,  the  Com- 
mission said :  "  It  is  not  always  enough  that  open  rates  are  made  and 
strictly  observed,  even  if  fair  and  reasonable  for  the  service  rendered ;  nor 
is  it  sufficient  in  every  case  that  a  relation  of  rates,  just  from  the  carrier's 
standpoint,  is  maintained  as  between  shipments  of  the  same  article  by  differ- 
ent methods  and  in  different  quantities.  For  example,  a  carload  rate  lower 
than  the  less  than  carload  rate,  where  the  difference  is  not  too  great,  would 
ordinarily  be  lawful ;  but  a  still  lower  rate  for  shipments  of  a  hundred 
or  a  thousand  carloads,  though  duly  published  and  impartially  applied, 
would  be  wholly  indefensible.  If  a  low  rate  is  granted  on  conditions  witli 
which  only  a  few  can  comply  that  rate  is  presumably  unfair  and  may  b<? 
extremely  prejudicial  to  all  other  shippers  of  like  traffic,  because  they  are 
practically  unable  to  meet  the  terms  upon  which  it  is  offered." 

With  regard  to  difference  in  rates  as  justified  by  difference  in  the  amount 
of  service,  see  State  v.  Sedalia  G.  L.  Co.  (1889),  34  Mo.  App.  501;  Silk- 
man  V.  Yonkers  W.  Com.   (1897),  1.52  N.  T.  327. 

1  The  statement  of  facts  and  part  of  the  opinion  are  omitted. —  Ed. 


356  DISCRIMINATION.  [CIIAP.    V. 

the  Baltimore  &  Ohio  Eailroad  Company,  through  the  defendant, 
in  the  first  place,  made  an  arrangement  by  which,  for  15  cents 
per  hundredweight,  it  would  bring  the  beer  from  Cincinnati,  and 
deliver  it  at  his  warehouse;  that  afterwards  this  arrangement  was 
changed,  and  it  delivered  the  beer  to  Mr.  Bruening  at  its  depot, 
and  allowed  him  314  cents  per  hundred  for  carting  it  to  his  ware- 
house. As  Mr.  Bruening  Irad  the  benefit  of  a  siding  connection 
with  the  competing  road,  and  could  get  the  beer  delivered  over  that 
road  at  his  warehouse  for  15  cents,  it  apparently  could  not  induce 
him  to  transfer  his  business  from  the  other  road  to  its  own  without 
extending  to  him  this  rebate.  During  all  this  time  it  was  carry- 
ing beer  for  Mr.  Wolf  from  the  same  place  of  shipment  (Cincin- 
nati) to  the  same  depot  in  Pittsburg,  and  charging  him  15  cents 
therefor.  Mr.  Wolf  had  no  siding  connection  with  the  rival  road, 
and  therefore  had  to  pay  for  his  cartage,  by  whichever  road  it  was 
carried.  His  warehouse  was,  in  a  direct  line,  140  yards  from  the 
depot,  while  Mr.  Bruening's  was  172  yards,  though  the  latter  gener- 
ally carted  the  beer  by  a  longer  route,  on  account  of  the  steepness 
of  the  ascent.  (Now,  it  is  contended  by  the  defendant  that  it  was 
necessary  for  the  Baltimore  &  Ohio  Company  to  offer  this  induce- 
ment to  Mr.  Bruening  in  order  to  get  his  business,  and  not  neces- 
sary to  make  the  like  offer  to  Mr.  Wolf,  because  he  would  have  to 
go  to  the  expense  of  carting,  by  whichever  road  he  transported; 
that  therefore  the  traffic  was  not  "under  substantially  similar  cir- 
cumstances and  conditions,"  within  the  terms  of  section  3.  We 
are  unable  to  concur  in  this  view. '  Whatever  the  Baltimore  &  Ohio 
Company  might  lawfully  do  to  draw  business  from  a  competing 
line,  whatever  inducements  it  might  offer  to  the  customers  of  that 
competing  line  to  induce  them  to  change  their  carrier,  is  not  a  ques- 
tion involved  in  this  case.  The  wrong  prohibited  by  the  section 
is  a  discrimination  between  shippers.  It  was  designed  to  compel 
every  carrier  to  give  equal  rights  to  all  shippers  over  its  own  road, 
and  to  forbid  it  by  any  device  to  enforce  higher  charges  against  one 
than  another.  Counsel  insist  that  the  purpose  of  the  section  was 
not  to  prohibit  a  carrier  from  rendering  more  service  to  one  shipper 
than  to  another  for  the  same  charge,  but  only  that  for  the  same 
service  the  charge  should  be  equal,  and  that  the  effect  of  this  ar- 
rangement was  simply  the  rendering  to  Mr.  Bruening  of  a  little 
greater  service  for  the  15  cents  than  it  did  to  Mr.  Wolf.  They  say 
that  the  section  contains  no  prohibition  of  extra  service  or  extra 
privileges  to  one  shipper  over  that  rendered  to  another.  They  ask 
whether,  if  one  shipper  has  a  siding  connection  with  the  road  of  a 
carrier,  it  cannot  run  the  cars  containing  such  shipper's  freight 
onto  that  siding,  and  thus  to  his  warehouse,  at  the  same  rate  that 


DISCRIMINATION.  357 

it  rims  cars  to  its  own  depot,  and  there  delivers  goods  to  other  ship- 
pers who  are  not  so  fortunate  in  the  matter  of  sidings.  But  the 
service  performed  in  transporting  from  Cincinnati  to  the  depot 
at  Pittsburg  was  precisely  alike  for  each.  The  one  shipper  paid 
15  cents  a  hundred;  the  other,  in  fact,  but  Ifi/o  cents.  It  is  true, 
he  formally  paid  15  cents,  but  he  received  a  rebate  of  3I/2  cents; 
and  regard  must  always  be  had  to  the  substance,  and  not  to  the 
form.  M:ndeed,  the  section  itself  forbids  the  carrier,  "directly  or 
indirectly  by  any  special  rate,  rebate,  drawback  or  otlier  device,"  to 
charge,  demand,  collect,  or  receive  from  any  person  or  persons  a 
greater  or  less  compensation,  &tc.j  And  section  6  of  the  act,  as 
amended  in  1889,  throws  light  upon  the  intent  of  the  statute ;  for 
it  requires  the  common  carrier,  in  publishing  schedules,  to  "state 
separately  the  terminal  charges,  and  any  rules  or  regulations  which 
in  any  wise  change,  affect,  or  determine  any  part  or  the  aggre- 
gate of  such  aforesaid  rates  and  fares  and  charges."  It  was  the 
purpose  of  the  section  to  enforce  equality  between  shippers,  and  it 
prohibits  any  rebate  or  other  device  by  which  two  shippers,  shipping 
over  the  same  line,  the  same  distance,  under  the  same  circumstances 
of  carriage,  are  compelled  to  pay  different  prices  therefore. 

It  may  be  that  the  phrase,  "  under  substantially  similar  circum- 
stances and  conditions,"  found  in  section  4  of  the  act,  and  where 
the  matter  of  the  long  and  short  haul  is  considered,  may  have  a 
broader  meaning  or  a  wider  reach  than  the  same  phrase  found  in 
section  2.  It  will  be  time  enough  to  determine  that  question  when 
it  is  presented.  For  this  case  it  is  enough  to  hold  that  that  phrase, 
as  found  in  section  2,  refers  to  the  matter  of  carriage,  and  does 
not  include  competition. 

We  see  no  error  in  the  record,  and  the  judgment  of  the  district 
court  is  affirmed. 

Mr.  Justice  White  concurs  in  the  judgment. 


INTERSTATE  COMMERCE  COMMISSION  v.  ALABAMA 
MIDLAND  RAILWAY  CO. 

168  U.  S.  144.     1897.^ 

Mr.  Justice  Shiras  delivered  the  opinion  of  the  court. 

Errors  are  likewise  assigned  to  the  action  of  the  court  in  having 
failed  and  refused  to  affirm  and  enforce  the  report  and  opinion  of 
the  Commission,  wherein  it  was  found  and  decided,  among  other 

1  The  statement  of  facts,  arguments  of  counsel,  part  of  the  opinion  of  Mr. 
Justice  Shiras  and  the  dissenting  opinion  of  Mr.  Justice  Harlan  are 
omitted. —  Ed. 


358  DISCRIMINATIOX.  [CHAP.    V. 

things,  that  the  defendant  common  carriers  which  participate  in 
the  transportation  of  class  goods  to  Troy  from  Louisville,  St. 
Louis,  Cincinnati,  and  from  New  York,  Baltimore,  and  other  North- 
eastern points,  and  the  defendant  common  carriers  which  partici- 
pate in  the  transportation  of  phosphate  rock  from  South  Carolina 
and  Florida  to  Troy,  and  the  defendant  common  carriers  which 
participate  in  the  transportation  of  cotton  from  Troy  to  the  ports 
of  New  Orleans,  Brunswick,  Savannah,  Charleston,  West  Point, 
or  Norfolk,  as  local  shipments,  or  for  export,  have  made  greater 
charges,  under  substantially  similar  circumstances  and  conditions, 
for  the  shorter  distance  to  or  from  Troy  than  for  longer  distances 
over  the  same  lines  in  the  same  direction,  and  have  unjustly  dis- 
criminated in  rates  against  Troy,  and  subjected  said  place  and 
dealers  and  shippers  therein  to  undue  and  unreasonable  prejudice 
and  disadvantage  in  favor  of  Montgomery,  Eufaula,  Columbus,  and 
other  places  and  localities,  and  dealers  and  shippers  therein,  in  viola- 
tion of  the  provisions  of  the  act  to  regulate  commerce. 

Whether  competition  between  lines  of  transportation  to  Mont- 
gomery, Eufaula,  and  Columbus  justifies  the  giving  to  those  cities 
a  preference  or  advantage  in  rates  over  Troy,  and,  if  so,  whether 
such  a  state  of  facts  justifies  a  departure  from  equality  of  rates 
without  authority  from  the  interstate  commerce  commission,  under 
the  proviso  to  the  fourth  section  of  the  act,  are  questions  of  con- 
struction of  the  statute,  and  are  to  be  determined  before  we  reach 
the  question  of  fact  in  this  case. 

It  is  contended  in  the  briefs  filed  on  behalf  of  the  Interstate  Com- 
mission that  the  existence  of  rival  lines  of  transportation,  and  conse- 
quently of  competition  for  the  traffic,  are  not  facts  to  be  considered 
by  the  Commission  or  by  the  courts  when  determining  whether  prop- 
erty transported  over  the  same  line  is  carried  under  "  substantially 
similar  circumstances  and  conditions,"  as  that  phrase  is  found  in 
the  fourth  section  of  the  act, 

'.That  competition  is  one  of  the  most  obvious  and  effective  circum- 
stances that  make  the  conditions  under  which  a  long  and  short  haul 
is  performed  substantially  dissimilar,  and  as  such  must  have  been 
in  the  conteiijplation  of  Congress  in  the  passage  of  the  act  to  regu- 
late commerce,  has  been  held  by  many  of  the  Circuit  Courts.)  It  is 
sufficient  to  cite  a  few  of  the  number :  Ex  parte  Koehler,  -31  Fed. 
315;  Missouri  Pac.  Ey.  Co.  v.  Texas  &  P.  E.  Co.,  Id.  862;  Inter- 
state Commerce  Commission  v.  Atchison,  T.  &  S.  F.  E.  Co.,  50 
Fed.  395;  Interstate  Commerce  Commission  v.  New  Orleans  &  T. 
P.  R.  Co.,  56  Fed.  925,  943 ;  Behlmer  v.  Eailroad  Co.,  71  Fed.  835 ; 
Interstate  Commerce  Commission  v.  Louisville  &  N.  E.  Co.,  73 
Fed.  409. 


DISCRIMINATION-.  359 


In  construing  statutory  provisions  forbidding  railway  companies 
from  givino-  any  undue  or  unreasonable  preference  or  advantage 
to  or  in  favor  of  any  particular  person  or  company,  or  any  par- 
ticular description  of  traffic,  in  any  respect  whatever,  the  English 
courts  have  held,  after  full  consideration,  that  competition  between 
rival  lines  is  a  fact  to  be  considered,  and  that  a  preference  or  ad- 
vantage thence  arising  is  not  necessarily  undue  or  unreasonable. 
Denaby  Colliery  Co.  v.  Manchester,  S.  &  L.  Ey.  Co.,  11  App.  Cas. 
97 ;  Phipps  V.  Railway  [1892]  3  Q.  B.  Div.  229. 

In  Texas  &  P.  R.  Co.  v.  Interstate  Commerce  Commission,  Ibi 
U    S'    197    it  was  held  that,   "in  passing  upon  questions   aris- 
ing under  the  act,  the  tribunal  appointed  to  enforce  its  provi- 
sions, whether  the  Commission  or  the  courts,   is  empowered  to 
fully  consider  all  the  circumstances  and  conditions  that  reasonably 
apply  to  the  situation,  and  that,  in  the  exercise  of  its  jurisdiction, 
the  tribunal  may  and  should  consider  the  legitimate  interests  as 
well  of  the  carrying  companies  as  of  the  traders  and  shippers,  and, 
in  considering  whether  any  particular  locality  is  subjected  to  an 
undue  preference  or  disadvantage,  the  welfare  of  the  communi- 
ties occupying  the  localities  where  the  goods  are  delivered  is  to  be 
considered  as  well  as  that  of  the  communities  which  are  m  the 
locality  of  the  place  of  shipment;  that  among  the  circumstances 
and  conditions  to  be  considered,  as  well  in  the  case  of  traffic  origi- 
nating in  foreign  ports  as  in  the  case  of  traffic  originating  withm 
the  limits  of  the  United  States,  competition  that  affects  rates  should 
be  considered,  and  in  deciding  whether  rates  and  charges,  made  at 
a  low  rate  to  secure  foreign  freights  which  would  otherwise  go  by 
other  competitive  routes,  are  or  are  not  undue  and  unjust,  the  fair 
interests  of  the  carrier  companies  and  the  welfare  of  the  community 
which  is  to  receive  and  consume  the  commodities  are  to  be  con- 

sidered." 

To  prevent  misapprehension,  it  should  be  stated  that  the  con- 
clusion to  which  we  are  led  by  these  cases,  that,  in  applying  the 
provisions  of  the  third  and  fourth  sections  of  the  act,  which  make  it 
unlawful  for  common  carriers  to  make  or  give  any  undue  or  un- 
reasonable preference  or  advantage  to  any  particular  person  or 
locality,  or  to  charge  or  receive  any  greater  compensation  m  the 
ao-gregate  for  the  transportation  of  passengers  or  of  like  kind  of 
property,  under  substantially  similar  circumstances  and  conditions, 
for  a  shorter  than  for  a  longer  distance  over  the  same  line,  m  the 
same  direction,  competition  which  affects  rates  is  one  of  the  mat- 
ters to  be  considered,  is  not  applicable  to  the  second  section  of  the 

net 

As  we  have  shown  in  the  recent  case  of  Wight  v.  United  States 


360  DISCRIMINATION.  [CHAP.    V. 

167  U.  S.  512,  the  purpose  of  the  second  section  is  to  enforce 
equality  between  shippers  over  the  same  line,  and  to  prohibit 
any  rebate  or  other  device  by  which  two  shippers,  shipping  over 
the  same  line,  the  same  distance,  under  the  same  circumstances 
of  carriage,  are  compelled  to  pay  different  prices  therefor;  and  we 
there  held  that  the  phrase,  "  under  substantially  similar  circum- 
stances and  conditions,"  as  used  in  the  second  section,  refers  to  the 
matter  of  carriage,  and  does  not  include  competition  between  rival 
routes. 

This  view  is  not  open  to  the  criticism  that  different  meanings 
are  attributed  to  the  same  words  when  found  in  different  sections 
of  the  act ;  for  what  we  hold  is  that,  as  the  purposes  of  the  several 
sections  are  different,  the  phrase  under  consideration  must  be  read, 
in  the  second  section,  as  restricted  to  the  case  of  shippers  over  the 
same  road,  thus  leaving  no  room  for  the  operation  of  competition, 
but  that  in  the  other  sections,  which  cover  the  entire  tract  of  inter- 
state and  foreign  commerce,  a  meaning  must  be  given  to  the 
phrase  wide  enough  to  include  all  the  facts  that  have  a  legitimate 
bearing  on  the  situation,  among  which  we  find  the  fact  of  compe- 
tition when  it  affects  rates. 

In  order  further  to  guard  against  any  misapprehension  of  the 
scope  of  our  decision,  it  may  be  well  to  observe  that  we  do  not  hold 
that  the  mere  fact  of  competition,  no  matter  what  its  character 
or  extent,  necessarily  relieves  the  carrier  from  the  restraints  of 
the  third  and  fourth  sections,  but  only  that  these  sections  are 
not  so  stringent  and  imperative  as  to  exclude  in  all  cases  the  mat- 
ter of  competition  from  consideration,  in  determining  the  questions 
of  "  undue  or  unreasonable  preference  or  advantage,"  or  what  are 
*'  substantially  similar  circumstances  and  conditions."  The  com- 
petition may  in  some  cases  be  such  as,  having  due  regard  to  the  in- 
terests of  the  public  and  of  the  carrier,  ought  justly  to  have  effect 
upon  the  rates,  and  in  such  cases  there  is  no  absolute  rule  which 
prevents  the  commission  or  the  courts  from  taking  that  matter  into 
consideration. 

It  is  further  contended  on  behalf  of  the  appellant  that  the  courts 
below  erred  in  holding,  in  effect,  that  competition  of  carrier  with 
carrier,  both  subject  to  the  act  to  regulate  commerce,  will  justify 
a  departure  from  the  rule  of  the  fourth  section  of  the  act  without 
authority  from  the  interstate  commerce  commission,  under  the 
proviso  to  that  section. 

In  view  of  the  conclusion  hereinbefore  reached,  the  proposition 
comes  to  this:  That  when  circumstances  and  conditions  are  sub- 
stantially dissimilar  the  railway  companies  can  only  avail  them- 
selves of  such  a  situation  by  an  application  to  the  commission. 


DISCRIMINATION.  361 

The  language  of  the  proviso  is  as  follows : 

"That  upon  application  to  the  commission  appointed  under 
the  provisions  of  this  act,  such  common  carrier  may,  in  special 
cases,  after  investigation  by  the  commission,  be  authorized  to  charge 
less  for  longer  than  shorter  distances  for  the  transportation  of 
persons  or  property,  and  the  commission  may  from  time  to  time 
prescribe  the  extent  to  which  such  designated  common  carrier  may 
be  relieved  from  the  operation  of  this  section  of  this  act." 

(rhe  claim  now  made  for  the  commission  is  that  the  only  body 
which  has  the  power  to  relieve  railroad  companies  from  the  opera- 
tion of  the  long  and  short  haul  clause  on  account  of  the  existence  of 
competition,  or  any  other  similar  element  which  would  make  its 
application  unfair,  is  the  commission  itself,  which  is  bound  to 
consider  the  question,  upon  application  by  the  railroad  company, 
but  whose  decision  is  discretionary  and  unreviewable.) 

The  first  observation  that  occurs  on  this  proposition  is  that  there 
appears  to  be  no  allegation  in  the  bill  or  petition  raising  such  an 
issue.  The  gravamen  of  the  complaint  is  that  the  defendant  com- 
panies have  continued  to  charge  and  collect  a  greater  compensa- 
tion for  services  rendered  in  transportation  of  property  than  is 
prescribed  in  the  order  of  the  commission.  It  was  not  claimed 
that  the  defendants  were  precluded  from  showing  in  the  courts  that 
the  difference  of  rates  complained  of  was  justified  by  dissimilarity 
of  circumstances  and  conditions,  by  reason  of  not  having  applied  to 
the  commission  to  be  relieved  from  the  operation  of  the  fourth 
section. 

Moreover,  this  view  of  the  scope  of  the  proviso  to  the  fourth 
section  does  not  appear  to  have  ever  been  acted  upon  or  enforced 
by  the  commission.  On  the  contrary,  in  the  case  of  In  re  Louis- 
ville &  N.  E.  Co.  V.  Interstate  Commerce  Commission,  1  Interst. 
Commerce  Com.  E.  57,  the  commission,  through  Judge  Cooley, 
said,  in  speaking  of  the  effect  of  the  introduction  into  the  fourth 
section  of  the  words,  "  under  substantially  similar  circumstances 
and  conditions,"  and  of  the  meaning  of  the  proviso :  ("  That  which 
the  act  does  not  declare  unlawful  must  remain  lawful;  if  it  was  so 
before;  and  that  which  it  fails  to  forbid  the  carrier  is  left  at 
liberty  to  do,  without  permission  of  any  one.  .  .  .  The  charging 
or  receiving  the  greater  compensation  for  the  shorter  than  for  the 
longer  haul  is  seen  to  be  forbidden  only  when  both  are  under  sub- 
stantially similar  circumstances  and  conditions;  and  therefore  if 
in  any  case  the  carrier,  without  first  obtaining  an  order  of  relief, 
shall  depart  from  the  general  rule,  its  doing  so  will  not  alone  con- 
vict it  of  illegality,  since,  if  the  circumstances  and  conditions  of 
the  two  hauls  are  dissimilar,  the  statute  is  not  violated.  .  .  .  Be- 


363  DISCRIMINATION".  [CHAP.    V. 

yond  question,  the  carrier  must  judge  for  itself  what  are  the  ^sub- 
stantially similar  circumstances  and  conditions '  which  preclude 
the  special  rate,  rebate,  or  drawback  which  is  made  unlawful  by  the 
second  section,  since  no  tribunal  is  empowered  to  judge  for  it 
until  after  the  carrier  has  acted,  and  then  only  for  the  purpose 
,of  determining  whether  its  action  constitutes  a  violation  of  law. 
The  carrier  judges  on  peril  of  the  consequences,  but  the  special 
rate,  rebate,  or  drawback  which  it  grants  is  not  illegal  when  it 
turns  out  that  the  circumstances  and  conditions  were  not  such  as  to 
forbid  it  Aand,  as  congress  clearly  intended  this,  it  must  also,  when 
using  the  same  words  in  the  fourth  section,  have  intended  that  the 
carrier  whose  privilege  was  in  the  same  way  limited  by  them  should 
in  the  same  way  act  upon  its  judgment  of  the  limiting  circum- 
stances and  conditions." 

The  view  thus  expressed  has  been  adopted  in  several  of  the 
circuit  courts.  Interstate  Commerce  Commission  v.  Atchison,  T. 
&  S.  F.  R.  Co.,  50  Fed.  300;  Interstate  Commerce  Commission  v. 
Cincinnati,  N.  0.  &  T.  P.  Ry.  Co.,  56  Fed.  942 ;  Behlmer  v.  Rail- 
road Co.,  71  Fed.  839.  And  we  do  not  think  the  courts  below 
erred  in  following  it  in  the  present  case.  We  are  unable  to  sup- 
pose that  congress  intended,  by  the  fourth  section  and  the  proviso 
thereto,  to  forbid  common  carriers,  in  cases  where  the  circum- 
stances and  conditions  are  substantially  dissimilar,  from  making 
different  rates  until  and  unless  the  commission  shall  authorize  them 
so  to  do.  Much  less  do  we  think  that  it  was  the  intention  of  con- 
gress that  the  decision  of  the  commission,  if  applied  to,  could  not 
be  reviewed  by  the  courts.^ 


AYRES  V.  CHICAGO  AND  NORTHWESTERN  RAIL- 
WAY CO. 

71  Wis.  372.     1888.^ 

Cassoday,  J.  This  case  was  here  on  a  question  of  pleading  upon 
a  former  appeal.  58  Wis.  537.  The  amended  complaint  is  to  the 
effect  that  the  defendant,  being  a  common  carrier  engaged  in  the 
transportation  of  live-stock,  and  accustomed  to  furnish  cars  for  all 
live-stock  offered,  was  notified  by  the  plaintiffs,  on  or  about  October 

2  See  Louisville  &  N.  R.  R.  Co.  v.  Behlmer  (1900),  175  U.  S.  648;  East 
Tenn.  V.  &  G.  Ry.  Co.  v.  Int.  Com.  Com.   (1901),  181  U.  S.  1. 

See  Interstate  Commerce  Act  §4,  as  amended  in  1910,  Appendix,  p.  487, 
and  the  interpretation  of  the  amended  section  in  Intermountain  Rate  Cases 
(1914),  284  U.  S.  47G. 

1  Part  of  the  statement  of  facts  and  part  of  the  opinion  are  omitted. —  Ed. 


DISCRIMINATION.  363 

13,  1882,  to  have  four  such  cars  for  the  transportation  of  cattle, 
hogs,  and  sheep  at  its  station  La  Valle,  and  three  at  its  station 
Eeedsburg,  ready  for  loading  on  Tuesday  morning,  October  17, 
1883,  for  transportation  to  Chicago;  that  the  defendant  neglected 
and  refused  to  provide  such  cars  at  either  of  said  stations  for  four 
days,  notwithstanding  it  was  able  and  might  reasonably  have  done 
so;  and  also  neglected  and  refused  to  carry  said  stock  to  Chicago 
with  reasonable  diligence,  so  that  they  arrived  there  four  days  later 
than  they  otherwise  would  have  done;  whereby  the  plaintiffs  suf- 
fered loss  and  damage,  by  decrease  in  price  and  otherwise,  $1,700. 

Whether  the  defendant  could  with  such  diligence  so  furnish  upon 
the  notice  given,  was  necessarily  a  question  of  fact  to  be  deter- 
mined.    The  plaintiffs,  as  such  shippers,  had  the  right  to  com- 
mand the  defendant  to  furnish  such  cars.     But  they  had  no  right  to 
insist  or  expect  compliance,  except  upon  giving  reasonable  notice 
of  the  time  when  they  would  be  required.     To  be  reasonable,  such 
notice  must  have  been  sufficient  to  enable   the  defendant,   with 
reasonable   diligence   under  the   circumstances   then   existing,   to 
furnish  the   cars   without  interfering  with  previous  orders   from 
other  shippers  at  the  same  station,  or  jeopardizing  its  business  on 
other  portions  of  its  road.     It  must  be  remembered  that  the  de- 
fendant has  many  lines  of  railroad  scattered  through  several  differ- 
ent states.     Along  each  and  all  of  these  different  lines  it  has  sta- 
tions of  more  or  less  importance.     The  company  owes  the  same 
duty  to  shippers  at  any  one  station  as  it  does  to  the  shippers  at 
any  other  station  of  the  same  business  importance.     The  rights  of 
all  shippers  applying  for  such  cars  under  the  same  circumstances 
are  necessarily  equal.     No  one  station,  much  less  any  one  shipper, 
has  the  right  to  command  the  entire  resources  of  the  company  to 
the  exclusion  or  prejudice  of  other  stations  and  other  shippers. 
Most  of  such  suitable  cars  must  necessarily  be  scattered  along  and 
upon  such  different  lines  of  railroad,  loaded  or  unloaded.     Many 
will  necessarily  be  at  the  larger  centers  of  trade.     The  conditions 
of  the  market  are  not  always  the  same,  but  are  liable  to  fluctuations, 
and  may  be  such  as  to  create  a  great  demand  for  such  cars  upon 
one  or  more  of  such  lines,  and  very  little  upon  others.     Such  cars 
should  be  distributed  along  the  different  lines  of  road,  and  the 
several  stations  on  each,  as  near  as  may  be  in  proportion  to  the 
ordinary  business  requirements  at  the  time,  in  order  that  ship- 
ments may  be  made  with  reasonable  celerity.     The  requirement  of 
such  fair  and  general  distribution  and  uniform  vigilance  is  not 
only  mutually  beneficial  to  producers,  shippers,  carriers,  and  pur- 
chasers, but  of  business  and  trade  generally.  (It  is  the  extent  of 
such  business  ordinarily  done  on  a  particular  line,  or  at  a  par- 


364  DISCRIMINATION.  [CHAP.   V. 

ticular  station,  which  properly  measures  the  carrier's  obligation  to 
furnish  such  transportation.  But  it  is  not  the  duty  of  such  car- 
rier to  discriminate  in  favor  of  the  business  of  one  station  to  the 
prejudice  and  injury  of  the  business  of  another  station  of  the 
same  importance)  These  views  are  in  harmony  with  the  adjudica- 
tions last  cited. ' 


INTERSTATE  COMMERCE  COMMISSION  v.  ILLINOIS 
CENTRAL  RAILROAD  CO. 

215  U.  S.  452.     1910.^ 

Mr.  Justice  White  delivered  the  opinion  of  the  court. 

Notwithstanding  full  performance  by  railway  carriers  of  the 
duty  to  have  a  legally  sufficient  supply  of  coal  cars,  it  is  conceded 
that  unforeseen  periods  arise  when  a  shortage  of  such  cars  to 
meet  the  demand  for  the  transportation  of  coal  takes  place,  because, 
among  other  things,  (a)  of  the  wide  fluctuation  between  the  de- 
mands for  the  transportation  of  bituminous  coal  at  different  and 
"uncertain  periods;  (b)  the  large  number  of  loaded  coal  cars  de- 
livered by  a  carrier  beyond  its  own  line  for  transportation  over 
other  roads,  consequent  upon  the  fact  that  the  coal  produced  at  a 
particular  point  is  normally  distributed  for  consumption  over  an 
extensive  area;  and  (c)  because  the  cars  thus  parted  with  are  sub- 
ject to  longer  detentions  than  usually  obtain  in  the  case  of  ship- 
ments of  other  articles,  owing  to  the  fact  that  bituminous  coal  is 
often  shipped  by  mining  operators  to  distant  points,  to  be  sold 
after  arrival,  and  is  hence  held  at  the  terminal  points  awaiting 
sale,  or  because,  owing  to  the  cost  of  handling  coal,  and  the  diffi- 
culty of  storing  such  coal,  the  car  in  which  it  is  shipped  is  often 
used  by  the  shipper  or  purchaser  at  the  terminal  points  as  a  con- 
venient means  of  storage  or  as  an  instrument  for  delivery,  without 
the  expense  of  breaking  bulk,  to  other  and  distant  points. 

It  is  disclosed  that  the  railroads  of  the  United  States  generally, 
at  various  times,  put  in  force  regulations  for  the  distribution  of 
coal  cars.  Generally  speaking,  these  regulations  provide  for  fixing 
the  capacity  of  coal  mines  in  order  to  determine  the  number  of  cars 
to  which  each  might  normally  be  entitled  to  daily  move  its  output 
of  coal.  And  these  regulations  also  provide  for  a  method  of  deter- 
mining the  pro  rata  share  of  the  cars  daily  allotted  for  distribution 
in  times  of  car  shortage.  Neither  the  method  by  which  capacity 
was  to  be  ascertained  nor  the  regulation  for  daily  distribution 
upon  the  basis  of  such  capacity  in  case  of  shortage  were  identical 

1  The  arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


DISCRIMINATION.  365 

among  the  various  railroad  systems  of  the  United  States.  The 
divergence,  and  even  conflict,  between  those  systems,  is  illustrated 
by  the  cases  of  Logan  Coal  Co.  v.  Pennsylvania  R.  Co.,  154  Fed. 
497;  United  States  ex  rel.  Pitcairn  Coal  Co.  v.  Baltimore  &  0.  R. 
Co.,  91  C.  C.  A.  147,  165  Fed.  113;  cases  cited  at  pages  503  and 
504  of  the  report  of  the  Logan  Coal  Co.  Case,  and  the  case  of 
Majestic  Coal  &  Coke  Co.  v.  Illinois  C.  R.  Co.,  162  Fed.  810. 

In  a  general  sense,  however,  all  the  regulations  of  the  various 
railroads,  either  for  ascertaining  the  capacity  of  coal  mines,  or  in 
order  to  determine  the  pro  rata  share  for  daily  distribution  of  cars 
to  the  respective  mines  in  case  of  shortage,  dealt  with  four  classes 
of  cars :  1,  system  cars,  that  is,  cars  owned  by  the  carrier  and  in 
use  for  the  transportation  of  coal;  2,  company  fuel  cars,  that  is, 
cars  belonging  to  the  company,  and  used  by  it  when  necessary  for 
the  movement  of  coal  from  the  mines  on  its  own  line,  and  which 
coal  had  been  bought  by  the  carrier,  and  was  used  solely  for  its 
own  fuel  purposes;  3,  private  cars,  that  is,  cars  either  owned  by 
coal  mining  companies  or  shippers  or  consumers,  and  used  for  the 
benefit  of  their  owners  in  conveying  coal  from  the  mines  to  desig- 
nated points  of  delivery;  4,  foreign  railway  fuel  cars,  that  is,  cars 
owned  by  other  railroad  companies,  and  which  were  by  them  de- 
livered to  the  carriers  on  whose  lines  mines  were  situated,  for  the 
purpose  of  enabling  the  cars  to  be  loaded  with  coal  and  returned 
to  the  company  by  whom  the  cars  had  been  furnished,  the  coal 
being  intended  for  use  as  fuel  by  such  foreign  railroad  companies. 

The  various  regulations,  irrespective  of  minor  differences  between 
them,  fell  upon  one  or  the  other  side  of  this  broad  line  of  division. 
One  system  took  into  account  class  2,  the  fuel  cars  of  the  carrier, 
class  3,  the  private  cars,  and  class  4,  the  cars  of  foreign  railroads, 
and  deducted  from  the  rated  capacity  of  the  mine  the  sum  of  coal 
delivered  by  that  mine  in  such  cars,  and  upon  the  basis  thus  re- 
sulting apportioned  ratably,  in  case  of  shortage,  the  system  cars; 
that  is,  those  embraced  in  class  1.  On  the  other  hand,  the  other 
class  of  regulation  not  only  took  no  account  of  the  cars  in  classes 
2,  3,  and  4,  as  a  means  of  rating  the  capacity  of  the  mine,  but 
moreover  did  not  charge  against  any  mine,  for  the  purpose  of 
ascertaining  the  daily  pro  rata  of  the  cars  to  which  such  mine 
was  entitled,  any  car  whatever  furnished  such  mine  on  such  day 
embraced  within  classes  2,  3,  and  4,  that  is,  any  company  fuel  car, 
foreign  railway  fuel  car,  or  private  car.  By  this  system,  there- 
fore, where  a  mine  was  entitled  daily  to  a  given  pro  rata  of  the 
cars  subject  to  general  distribution,  it  received  its  full  share  of 
such  cars,  and  in  addition  on  that  day  also  received  such  of  the 
company  fuel  cars,  foreign  railway  fuel  cars,  and  private  cars  as 


366  DISCRIMINATION.  [CHAP.    V. 

might  have  been  sent  to  it  for  loading  on  that  day.  This  abso- 
lute disregard  in  the  allotment  of  the  company  fuel  cars,  foreign 
railway  fuel  cars,  and  private  cars  was  not  in  all  respects  common 
to  all  the  systems  which  took  no  account  of  such  cars  in  fixing 
capacity,  since  in  some  of  the  regulations  one  or  the  other  of  the 
classes  was  taken  into  account  in  fixing  the  pro  rata  for  distribu- 
tion. 

On  October  31,  1907,  the  Illinois  Collieries  Company  filed  with 
the  Interstate  Commerce  Commission  a  complaint  against  the  Illi- 
nois Central  Eailroad  Company.  The  regulations  of  the  railroad 
company  as  to  the  distribution  of  coal  cars  were  assailed  as  un- 
justly discriminatory,  in  violation  of  the  act  to  regulate  commerce, 
particularly  as  respected  the  practice  of  not  taking  into  considera- 
tion foreign  railway  fuel  cars  and  private  cars  in  determining  the 
distribution  of  coal  cars  among  the  various  coal  operators  along  the 
lines  of  the  railroad  on  interstate  shipments  of  coal.  It  appears 
that  the  complaint  just  referred  to  was  heard  before  the  Com- 
mission, with  two  other  complaints  against  other  railroads,  involv- 
ing the  same  general  subject. 

Although  the  complaint  in  the  case  of  the  Illinois  Central  Eail- 
road Company  differed  from  the  complaints  in  the  two  other  cases 
which  were  considered  and  passed  upon  by  the  Commission  at  the 
same  time,  in  that  it  did  not  assail  the  failure  to  take  into  account 
the  company  fuel  cars  in  making  distribution  in  times  of  car 
shortage,  nevertheless  the  Commission  declared  that  the  Illinois 
Central  Eailroad  Company,  both  in  its  brief  and  argument,  had 
conceded  the  importance  of  the  subject  to  that  company,  and  had 
invoked  the  action  of  the  Commission  thereon. 

The  order  of  the  Commission,  as  heretofore  stated,  therefore,  not 
only  directed  the  desisting  from  the  practice  of  failing  to  take  into 
account  the  foreign  railway  fuel  cars,  private  cars,  and  the  com- 
pany fuel  cars,  but  also  required  the  carriers  to  establish  regula- 
tions for  a  period  of  two  years  from  July  1,  1908,  providing  for 
the  counting  of  all  such  cars.  The  general  scope  of  the  order  was, 
however,  qualified  by  expressly  authorizing  a  railroad  company  to 
deliver  to  a  particular  mine  all  the  foreign  railway  fuel  cars,  the 
private  cars,  and  the  company  fuel  cars  consigned  or  assigned  to 
said  mine,  even  although  the  number  thereof  might  exceed  the  pro 
rata  share  of  the  cars  attributable  to  said  mine  when  ascertained 
by  taking  into  account  all  the  cars  which  the  order  required  to  be 
considered.  Where,  however,  the  number  of  such  cars  was  less 
than  the  pro  rata  share  of  the  mine,  the  order  only  permitted  the 
carrier  to  add  a  sufficient  number  of  system  cars  to  make  up  the 
rightful  pj'o  rata  number. 


DISCRIMINATION.  367 

Being  unwilling  to  comply  with  the  order  of  the  Commission, 
the  Illinois  Central  Kailroad  Company  commenced  the  suit  which 
is  now  before  us  to  enjoin  in  all  respects  the  enforcement  of  the 
order  of  the  Commission.  A  certificate  as  to  the  public  importance 
of  the  cause  was  filed  by  the  attorney  general,  in  compliance 
with  §  16  as  amended  by  the  act  of  June  29,  1906  (34  Stat,  at  L. 
584,  chap.  3591,  U.  S.  Comp.  Stat.  Supp.  1909,  p.  1149),  and  the 
cause  was  thereafter  submitted  at  the  same  time  with  one  brought  by 
the  Alton  Eailroad,  involving  a  similar  question,  to  a  circuit  court 
held  by  Judges  Grosscup,  Baker,  and  Kohlsatt.  A  single  opinion 
was  announced  in  both  cases. 

From  the  final  decree  enjoining  the  Commission  from  enforcing 
its  order,  in  so  far  as  it  directed  the  taking  into  account  the  com- 
pany fuel  cars  in  the  distribution  of  coal  cars  in  times  of  car 
shortage,  and  in  so  far  as  it  directed  the  future  taking  such  cars 
into  account,  the  Interstate  Commerce  Commission  appeals. 

As  the  Interstate  Commerce  Commission  alone  has  appealed, 
it  is  patent  that  those  portions  of  the  order  of  the  Commission 
which  concern  foreign  railway  fuel  cars  and  private  cars,  and 
which  the  court  below  refused  to  enjoin,  are  not  open  to  inquiry. 
The  suggestion  at  once  presents  itself  whether,  if  these  subjects 
are  not  open,  they  do  not  necessarily  carry  with  them  the  question 
of  company  fuel  cars,  on  the  ground  that  the  three  classes  rest 
upon  one  and  the  same  consideration,  and  that  to  divorce  them 
would  bring  about  conditions  of  preference  and  discrimination 
which  the  act  to  regulate  commerce  expressly  prohibits.  In  view, 
however,  of  the  great  importance  of  the  questions  directly  arising 
for  decision,  and  the  fact  that  the  court  below  has  treated  the  com- 
pany fuel  cars  as  distinct,  we  shall  not  be  sedulous  to  pursue  the 
suggestion,  and  come  at  once  to  the  propositions  of  power  previously 
stated. 

First.  That  the  act  to  regulate  commerce  has  not  delegated  to 
the  Commission  authority  to  regulate  the  distribution  of  company 
fuel  cars  in  times  of  car  shortage  as  a  means  of  prohibiting  unjust 
preferences  or  undue  discrimination. 

When  coal  is  received  from  the  tipple  of  a  coal  mine  into  coal 
cars  by  a  railway  company,  and  the  coal  is  intended  for  its  own 
use  and  is  transported  by  it,  it  is  said  there  is  no  consignor,  no 
consignee,  and  no  freight  to  be  paid,  and  therefore,  although  there 
may  be  transportation,  there  is  no  shipment,  and  hence  no  com- 
merce. In  changed  form,  these  propositions  but  embody  the  reason- 
ing which  led  the  court  below  to  its  conclusion  that,  under  the  cir- 
cumstances, commerce  ended  at  the  tipple  of  the  mine.  The  de- 
duction from  the  proposition  is,  as  the  movement  of  coal  under 


368  DISCRIMINATION.  [CHAP.   V. 

the  conditions  stated  is  not  commerce,  it  is  therefore  not  within  the 
authority  delegated  to  the  Commission  by  the  act  of  Congress,  as 
all  such  acts  have  relation  to  the  regulation  of  commerce,  and  do 
not,  therefore,  embrace  that  which  is  not  commerce. 

We  think,  when  the  erroneous  assumption  upon  which  the  proposi- 
tion must  rest  is  considered,  its  unsoundness  is  readily  demonstrable. 
That  assumption  is  this :  that  commerce,  in  the  constitutional  sense, 
only  embraces  shipment  in  a  technical  sense,  and  does  not,  there- 
fore, extend  to  carriers  engaged  in  interstate  commerce,  certainly 
in  so  far  as  so  engaged,  and  the  instrumentalities  by  which  such 
commerce  is  carried  on, —  a  doctrine  the  unsoundness  of  which  has 
been  apparent  ever  since  the  decision  in  Gibbons  v.  Ogden,  9 
Wheat.  1,  and  which  has  not  since  been  open  to  question.  It 
may  not  be  doubted  that  the  equipment  of  a  railroad  com- 
pany engaged  in  interstate  commerce,  included  in  which  are  its 
coal  cars,  are  instruments  of  such  commerce.  From  this  it  neces- 
sarily follows  that  such  cars  are  embraced  within  the  governmental 
power  of  regulation,  which  extends,  in  time  of  car  shortage,  to 
compelling  a  just  and  equal  distribution,  and  the  prevention  of  an 
unjust  and  discriminatory  one. 

The  corporation,  as  a  carrier  engaged  in  interstate  commerce, 
being,  then,  as  to  its  interstate  commerce  business,  subject  to  the 
control  exerted  by  the  act  to  regulate  commerce,  and  the  instru- 
mentalities employed  for  the  purpose  of  such  commerce  being  like- 
wise so  subject  to  control,  we  are  brought  to  consider  the  remaining 
proposition,  which  is : 

Second.  That,  even  if  power  lias  been  delegated  to  the  Coin- 
mission  hy  the  act  to  regulate  commerce,  the  order  whose  continued 
enforcement  was  enjoined  by  the  court  below  was  beyond  the  author- 
ity delegated  by  the  statute. 

In  view  of  the  facts  found  by  the  Commission  as  to  preferences 
and  discriminations  resulting  from  the  failure  to  count  the  com- 
pany fuel  cars  in  the  daily  distribution  in  times  of  car  shortage, 
and  in  further  view  of  the  far-reaching  preferences  and  discrimina- 
tions alleged  in  the  answer  of  the  Commission  in  this  case,  and 
which  must  be  taken  as  true,  as  the  cause  was  submitted  on  bill 
and  answer,  it  is  beyond  controversy  that  the  subject  with  which 
the  order  dealt  was  within  the  sweeping  provisions  of  §  3  of  the 
act  to  regulate  commerce,  prohibiting  preferences  and  discrimi- 
nations. But  it  is  contended  that  although  this  be  the  case,  as 
the  order  of  the  Commission  not  only  forbade  the  preferences  and 
discriminations  complained  of,  but  also  commanded  the  establish- 
ment of  a  rule  excluding  such  discriminations  for  a  future  definite 
period   of   not   exceeding   two   years,   the   order   transcended   the 


DISCRIMINATION,  369 

authority  conferred  upon  the  commission.  This  proceeds  upon  the 
assumption  that  §  15  of  the  act  to  regulate  commerce,  as  enacted 
by  the  act  of  June  29,  1906,  while  conferring  upon  the  Commission 
the  authority,  upon  complaint  duly  made,  to  declare  a  rate  or 
practice  affecting  rates  illegal,  and  to  establish  a  new  and  reason- 
able rule  or  practice  affecting  such  rates  for  a  term  not  exceeding 
two  years,  has  no  relation  to  complaints  concerning  preferences  or 
discriminations,  unless  such  practices,  when  complained  of,  are  of  a 
character  to  affect  rates,  which  it  is  insisted  is  not  here  the  case. 
The  pertinent  part  of  the  section  in  question  (15)  reads  as  follows: 

"  That  the  Commission  is  authorized  and  empowered,  and  it 
shall  be  its  duty,  whenever,  after  full  hearing  upon  a  complaint 
made  as  provided  in  section  13  of  this  act,  or  upon  complaint 
of  any  common  carrier,  it  shall  be  of  the  opinion  that  any  of  the 
rates  or  charges  whatsoever,  demanded,  charged,  or  collected  by 
any  common  carrier  or  carriers,  subject  to  the  provisions  of  this 
act,  for  the  transportation  of  persons  or  property,  as  defined  in 
the  first  section  of  this  act,  or  that  any  regulations  or  practices 
whatsoever  of  such  carrier  or  carriers  affecting  such  rates,  are  un- 
just or  unreasonable,  or  unjustly  discriminatory,  or  unduly  pref- 
erential or  prejudicial,  or  otherwise  in  violation  of  any  of  the  pro- 
visions of  this  act,  to  determine  and  prescribe  what  will  be  the  just 
and  reasonable  rate  or  rates,  charge  or  charges,  to  be  thereafter 
observed  in  such  case  as  the  maximum  to  be  charged;  and  what 
regulation  or  practice  in  respect  to  such  transportation  is  just, 
fair,  and  reasonable  to  be  thereafter  followed;  and  to  make  an 
order  that  the  carrier  shall  cease  and  desist  from  such  violation, 
to  the  extent  to  which  the  Commission  find  the  same  to  exist,  and 
shall  not  thereafter  publish,  demand,  or  collect  any  rate  or  charge 
for  such  transportation  in  excess  of  the  maximum  rate  or  charge  so 
prescribed,  and  shall  conform  to  the  regulation  or  practice  so  pre- 
scribed. 

"  All  orders  of  the  Commission,  except  orders  for  the  payment 
of  money,  shall  take  effect  within  such  reasonable  time,  not  less 
than  thirty  days,  and  shall  continue  in  force  for  such  period  of 
time,  not  exceeding  two  years,  as  shall  be  prescribed  in  the  order 
of  the  Commission,  unless  the  same  shall  be  suspended  or  modi- 
fied or  set  aside  by  the  Commission,  or  be  suspended  or  set  aside 
by  a  court  of  competent  jurisdiction." 

The  contention  gives  to  the  words  found  in  the  earlier  part  of 
the  section,  "  any  regulation  or  practice  whatsoever  of  such  carrier 
or  carriers  affecting  such  rates,"  a  dominant  and  controlling  power, 
so  as  to  cause  them  to  limit  every  other  provision  in  the  section, 
however  general  in  its  language.     We  do  not  stop  to  critically  ex- 


370  DISCRIMINATION-.  [CHAP.    V. 

amine  the  provision  relied  upon,  for  the  purpose  of  pointing  out, 
as  a  matter  of  grammatical  construction,  the  error  of  the  con- 
tention, because  we  think,  when  the  text  of  the  section  is  taken 
into  view  and  all  its  provisions  are  given  their  natural  significance, 
it  obviously  appears  that  the  construction  relied  upon  is  without 
foundation,  and  that  to  sustain  it  would  be  to  frustrate  the  very 
purpose  which  it  is  clear,  when  the  entire  provision  is  considered, 
it  was  designed  to  accomplish,  and  thus  would  be  destructive  of 
the  plain  intent  of  Congress  in  enacting  the  provision.  The  ante- 
cedent construction  which  the  interstate  commerce  act  had  necessi- 
tated, and  the  remedial  character  of  the  amendments  adopted  in 
1906,  all  serve  to  establish  the  want  of  merit  in  the  contention  re- 
lied upon.  In  addition,  to  adopt  it  would  require  us  to  hold  that 
Congress,  in  enlarging  the  power  of  the  Commission  over  rates, 
had  so  drafted  the  amendment  as  to  cripple  and  paralyze  its  power 
in  correcting  abuses  as  to  preferences  and  discriminations  which, 
as  this  court  has  hitherto  pointed  out,  it  was  the  great  and  funda- 
mental purpose  of  Congress  to  further. 

Conceding,  for  the  sake  of  the  argument,  the  existence  of  the 
preferences  and  discriminations  charged,  it  is  insisted,  when  the 
findings  made  by  the  Commission  are  taken  into  view  and  the 
pleadings  as  an  entirety  are  considered,  it  results  that  the  dis- 
criminations and  preferences  arose  from  the  fact  that  the  railroad 
company  chose  to  purchase  its  coal  for  its  fuel  supply  from  a  par- 
ticular mine  or  mines,  and  that,  as  it  had  a  right  to  do  so,  it  is  im- 
possible, without  destroying  freedom  of  contract,  to  predicate 
illegal  preferences  or  wrongful  discriminations  from  the  fact  of 
purchase.  But  the  proposition  overlooks  the  fact  that  the  regula- 
tion addresses  itself,  not  to  the  right  to  purchase,  but  to  the  duty 
to  make  equal  distribution  of  cars.  The  right  to  buy  is  one  thing, 
and  the  power  to  use  the  equipment  of  the  road  for  the  purpose 
of  moving  the  articles  purchased  in  such  a  way  as  to  discriminate 
or  give  preference  are  wholly  distinct  and  different  things.  The 
insistence  that  the  necessary  effect  of  an  order  compelling  the 
counting  of  company  fuel  cars  in  fixing,  in  case  of  shortage,  the 
share  of  cars  a  mine  from  which  coal  has  been  purchased  will  be 
entitled  to,  will  be  to  bring  about  a  discrimination  against  the  mine 
from  which  the  company  buys  its  coal,  and  a  preference  in  favor 
of  other  mines,  but  inveighs  against  the  expediency  of  the  order. 
And  this  is  true  also  of  a  statement  in  another  form  of  the  same 
proposition;  that  is,  that  if,  when  coal  is  bought  from  a  mine  by  a 
railroad,  the  road  is  compelled  to  count  the  cars  in  which  the  coal 
is  moved  in  case  of  car  shortage,  a  preference  will  result  in  favor 
of  the  mine  selling  coal  and  making  delivery  thereof  at  the  tipple 


DISCRIMINATION,  371 

of  the  mine  to  a  person  who  is  able  to  consume  it  without  the  neces- 
sity of  transporting  it  by  rail.  At  best,  these  arguments  but  sug- 
gest the  complexity  of  the  subject,  and  the  difficulty  involved  in 
making  any  order  which  may  not  be  amenable  to  the  criticism  that 
it  leads  to  or  may  beget  some  inequality.  Indeed,  the  arguments 
just  stated,  and  others  of  a  like  character  which  we  do  not  deem  it 
essential  to  specially  refer  to'  but  assail  the  wisdom  of  Congress 
in  conferring  upon  the  Commission  the  power  which  has  been 
lodged  in  that  body  to  consider  complaints  as  to  violations  of  the 
statute,  and  to  correct  them  if  found  to  exist,  or  attack  as  crude  or 
inexpedient  the  action  of  the  Commission  in  performance  of  the 
administrative  functions  vested  in  it,  and  upon  such  assumption 
invoke  the  exercise  of  unwarranted  judicial  power  to  correct  the 
assumed  evils.  It  follows  from  what  we  have  said  that  the  court 
below  erred  in  enjoining  the  order  of  the  Commission,  in  so  far  as 
it  related  to  company  fuel  cars,  and  its  decree  is  therefore  reversed, 
and  the  case  remanded  for  further  proceedings  in  conformity  with 
this  opinion. 

Mr.  Justice  Brewer  dissents. 


GAMBLE-EOBIXSON  COMMISSIOX  CO.  v.  CHICAGO  AND 
NORTHWESTERN  RAILWAY  CO. 

168  Fed.  IGl.     1909.^ 

Sanborn,  Circuit  Judge.  Section  3  of  the  act  of  February  4, 
1887,  commonly  called  the  "  Interstate  Commerce  Act,"  provides : 

"  That  it  shall  be  unlawful  for  any  common  carrier  subject  to  the 
provisions  of  this  act,  to  make  or  give  any  undue  or  unreasonable 
preference  or  advantage  to  any  particular  person,  company,  firm, 
corporation  or  locality,  or  any  particular  description  of  traffic  in 
any  respect  whatsoever,  or  to  subject  any  particular  person,  com- 
pany, firm,  corporation  or  locality,  or  any  particular  description  of 
traffic,  to  any  undue  or  unreasonable  prejudice  or  disadvantage  in 
any  respect  whatsoever."  24  Stat.  380,  c.  104  (3  U.  S.  Comp.  St. 
1901,  p.  3155). 

Is  it  a  violation  of  this  section  for  a  common  carrier  which  cus- 
tomarily delivers  to  consignees  a  certain  class  of  freight,  holds  the 
freight  bills  until  after  any  question  arising  concerning  the  cor- 
rectness of  any  transportation  charges  upon  its  line  and  upon  con- 
necting lines  over  which  the  freight  has  been  transported  has  been 

1  The  statement  of  facts,  part  of  the  opinion  of  Sanborij,  J.,  and  all  of 
the  dissenting  opinion  of  Hook,  J.,  are  omitted. —  Ed. 


372  DISCRIMINATION.  [CHAP.    V. 

adjusted,  and  then  collects  them,  to  refuse  to  grant  such  a  credit 
to  a  particular  consignee  and  to  require  prepayment  of  freight  bills 
by  it  while  it  still  continues  to  extend  credit  to  others  similarly 
situated?  In  other  words,  is  it  a  violation  of  this  section  for  a 
railroad  company  to  refuse  to  loan  to  one  consignee  without  in- 
terest the  moneys  owing  to  it  for  transportation  charges  earned 
by  it  and  for  those  paid  by  it  to  connecting  lines  until  the  con- 
signee's claims  that  such  charges  are  incorrect  have  been  settled, 
when  it  customarily  makes  such  loans  to  other  consignees?  This 
is  the  question  which  this  case  presents,  and  it  is  well  to  perceive 
clearly  the  nature  of  the  controversy  inherent  in  it  and  the  amount 
actually  involved  before  entering  upon  the  discussion  of  the  issue 
it  presents. 

Prior  to  the  enactment  of  the  act  of  February  24,  1887,  to  regu- 
late commerce  among  the  states,  interstate  railway  traffic  was 
regulated  by  the  principles  of  the  common  law,  and  under  those 
principles  common  carriers  had  the  right  to  require  the  prepay- 
ment of  charges  for  freight  of  one  or  more  persons  or  corporations, 
and  to  give  credit  for  such  charges  to  other  persons  or  corporations 
similarly  situated.  Interstate  Commerce  Commission  v.  Baltimore 
&  Ohio  R.  E.  Co.,  145  U.  S.  263,  275,  12  Sup.  Ct.  844,  36  L.  Ed. 
699;  Southern  Indiana  Express  Co.  v.  United  States  Express  Co. 
(C.  C.)  88  Fed.  659,  662;  Randall  v.  Railway  Company,  108  N.  C. 
612,  13  S.  E.  137. 

That  act  left  common  carriers  free  to  exercise  to  their  full  ex- 
tent all  the  rights  and  privileges  they  had  under  the  common  law, 
so  far  as  these  rights  and  privileges  and  their  exercise  were  not 
rendered  unlawful  by  the  provisions  of  that  act.  That  act  did  not 
make  all  preferences,  advantages,  prejudices,  or  disadvantages  un- 
lawful, but  those  only  which  are  "  undue  and  unreasonable." 

'The  question,  therefore,  is,  did  the  defendant  subject  the  plain- 
tiff to  any  undue  or  unreasonable  prejudice  or  disadvantage  by 
requiring  it  to  prepay  the  charges  on  its  freight  while  the  carrier 
customarily  transported  freight  for  others  similarly  situated  with- 
out such  prepayment?)  The  defendant  had  the  right  under  the 
common  law  to  demand  prepayment  of  its  charges  of  the  plain- 
tiff and  to  grant  credit  to  others  for  similar  charges.  It  had  the 
same  right  in  this  regard  that  every  merchant,  every  man,  and 
every  corporation  has  to  grant  credit  to  one  or  to  all  but  one,  and 
to  refuse  it  to  others  or  to  him.  There  was  nothing  unjust  or  morally 
wrong  in  the  exercise  of  this  right,  because  the  plaintiff  had  no 
moral  right  to  the  extension  of  credit,  and  justice  did  not  require 
that  the  defendant  should  grant  to  the  plaintiff  the  same  credit 
that  it  extended  to  others. 


DISCRIMINATION.  373 

The  interstate  commerce  act  did  not  expressly  deprive  the  de- 
fendant of  this  right  or  make  its  exercise  vmlawful;  so  far  as  its 
express  provisions  are  concerned,  it  left  the  right  and  its  exercise 
among  those  which  the  Supreme  Court  declared  that  carriers  were 
free  to  exercise  and  to  manage  upon  "  the  same  principles  which 
are  regarded  as  sound,  and  adopted  in  other  trades  and  pursuits." 

The  refusal  to  extend  credit  to  a  purchaser  of  goods,  or  of  trans- 
portation, of  financial  responsibility,  credit,  and  reputation  equal  to 
those  of  others  to  whom  such  credit  is  extended  does  not  in  the  na- 
ture of  things  subject  him  to  an  undue  or  unreasonable  prejudice  or 
disadvantage,  while  a  requirement  that  such  a  vendor  shall  extend 
equal  credit  to  all  purchasers  of  equal  financial  responsibility,  credit, 
and  reputation,  would  subject  him  to  unreasonable  and  undue  disad- 
vantage. Eeason,  sound  business  principles,  and  the  practice  of 
the  business  world  give  the  option  to  extend  credit  to  the  seller 
of  his  property,  or  his  services,  and  to  the  loaner  of  his  money,  and 
not  to  the  purchaser  or  borrower.  There  are  other  considerations 
besides  financial  responsibility,  credit,  and  reputation,  which  con- 
dition the  rational  extension  of  credit,  such  as  the  experience  of  the 
seller  or  the  loaner,  the  habits  of  the  purchaser  or  the  borrower, 
his  fairness  and  promptness. 

Finally,  the  question  at  issue  in  this  case  in  the  presence  of  a 
custom  and  usage  not  to  demand  prepayment  of  transportation 
charges,  in  the  presence  of  a  motive  and  purpose  by  the  defendant 
to  harass  and  oppress  the  plaintiff  by  the  demand  of  such  pre- 
payment, and  in  the  presence  of  the  subjection  of  the  plaintiff  in 
that  case  to  very  much  more  aggravated  prejudice  and  disadvan- 
tage than  those  alleged  in  the  action  under  consideration,  was  pre- 
sented, decided,  and  the  considered  opinion  of  this  court  upon  it 
was  delivered  by  Judge  Thayer  in  1894  in  these  words: 

"  It  will  be  observed  that  the  sole  question  in  the  cases  filed 
against  the  St.  Louis,  Iron  Mountain  &  Southern  Eailway  Com- 
pany concerns  the  right  of  that  company  to  require  the  prepayment 
of  freight  charges  on  all  property  tendered  to  it  for  transportation 
at  Little  Eock  by  the  Little  Eock  &  Memphis  Eailroad  Company, 
while  it  pursues  a  different  practice  with  respect  to  freight  received 
from  other  shippers  at  that  station.  At  common  law  a  railroad 
corporation  has  an  undoubted  right  to  require  the  prepayment  of 
freight  charges  by  all  its  customers,  or  some  of  them,  as  it  may 
think  best.  It  has  the  same  right  as  any  other  individual  or  cor- 
poration to  6xact  payment  for  a  service  before  it  is  rendered,  or  to 
extend  credit.  Oregon  Short  Line  &  U.  IST.  Ey.  Co.  v.  Northern 
Pacific  E.  Co.  (C.  C.)  51  Fed.  465,  472.  Usually,  no  doubt,  rail- 
road companies  find  it  to  their  interest,  and  most  convenient,  to 


374  DISCRIMINATION.  [CHAP.   V.  ^ 

collect  charges  from  the  consignee ;  but  we  cannot  doubt  their  right 
to  demand  a  reasonable  compensation  in  advance  for  a  proposed 
service,  if  they  see  fit  to  demand  it.  This  common-law  right  of 
requiring  payment  in  advance  of  some  customers,  and  of  extending 
credit  to  others,  has  not  been  taken  away  by  the  interstate  com- 
merce law,  unless  it  is  taken  away  indirectly  by  the  inhibition  con- 
tained in  the  third  section  of  the  act,  which  declares  that  an  in- 
terstate carrier  shall  not  '  subject  any  particular  person,  company, 
corporation  or  locality  ...  to  any  undue  or  unreasonable  .  .  . 
disadvantage  in  any  respect  whatever.'  This  prohibition  is  very 
broad,  it  is  true,  but  it  is  materially  qualified  and  restricted  by 
the  words  '  undue  or  unreasonable.'  One  person  or  corporation 
may  be  lawfully  subjected  to  some  disadvantage  in  comparison  with 
others,  provided  it  is  not  an  undue  or  unreasonable  disadvantage. 
In  view  of  the  fact  that  all  persons  and  corporations  are  entitled  at 
common  law  to  determine  for  themselves,  and  on  considerations 
that  are  satisfactory  to  themselves,  for  whom  they  will  render 
services  on  credit,  we  are  not  prepared  to  hold  that  an  interstate 
carrier  subjects  another  carrier  to  an  unreasonable  or  undue  dis- 
advantage because  it  exacts  of  that  carrier  the  prepayment  of  freight 
on  all  property  received  from  it  at  a  given  station,  while  it  does  not 
require  charges  to  be  paid  in  advance  on  freight  received  from 
other  individuals  and  corporations  at  such  station.  So  far  as  we 
are  aware,  no  complaint  had  been  made  of  abuses  of  this  character 
at  the  time  the  interstate  commerce  law  was  enacted,  and  it  may 
be  inferred  that  the  particular  wrong  complained  of  was  not  within 
the  special  contemplation  of  Congress.  This  being  so,  the  gen- 
eral words  of  the  statute  ought  not  to  be  given  a  scope  which  will 
deprive  the  defendant  company  of  an  undoubted  common-law  right, 
which  all  other  individuals  and  corporations  are  still  privileged  to 
exercise,  and  ordinarily  do  exercise."  Little  Eock  &  Memphis  E, 
Co.  V.  St.  Louis  S.  W.  E.  Co.,  63  Fed.  777,  11  C.  C.  A.  419  (26 
L.E.  A.  192). 

The  question  was  decided  in  the  same  way  by  Mr.  Justice  Field 
in  the  Circuit  Court  in  Oregon  Short  Line  &  U.  N.  Ey.  Co.  v. 
Northern  Pacific  E.  E.  Co.,  51  Fed.  465,  473,  474,  affirmed  by  the 
Circuit  Court  of  Appeals  of  the  Ninth  Circuit  in  9  C.  C.  A.  409, 
410,  412,  413,  414,  61  Fed.  158,  159,  161,  162,  and  by  the  Circuit 
Court  of  Appeals  of  the  Fifth  Circuit  in  Gulf,  C.  &  S.  F.  Ey.  Co.  v. 
Miami  S.  S.  Co.,  30  C.  C.  A.  142,  154,  155,  86  Fed.  407,  419,  420. 
It  is  more  than  14  years  since  this  court  rendered  that  decision,  no 
contrary  opinion  of  any  national  court  upon  this  question  has  been 
called  to  our  attention,  and  because  the  right  of  a  common  carrier 
to  require  prepayment  of  charges  for  transportation  from  one  and 


DISCRIMINATION.  375 

to  give  credit  for  them  to  another  similarly  situated  existed  under 
the  common  law,  because  neither  this  right  nor  its  exercise  were 
made  unlawful  by  the  terms  of  the  interstate  commerce  act,  be- 
cause the  exercise  of  that  right  is  not  in  itself  unreasonably  preju- 
dicial, or  disadvantageous,  because  the  former  decision  of  this  court 
rules  this  case  and  ought  not  to  be  overruled  unless  it  is  clearly 
wrong,  and  because  upon  a  careful  reconsideration  of  that  decision 
in  tlie  light  of  the  subsequent  decisions  of  the  courts  we  are  still 
convinced  that  it  was  right,,'  our  conclusion  in  this  case  is  that  the 
requirement  by  the  plaintifhof  the  prepayment  of  charges  by  the 
defendant  for  the  transportation  of  its  freight,  while  no  such  re- 
quiremjent  was  made  of  others  similarly  situated,  while  there  existed 
a  custom  or  usage  for  the  carrier  to  advance  the  charges  of  con- 
necting carriers,  to  deliver  the  freight  to  the  consignees,  to  hold 
bills  for  freight  until  claims  arising  out  of  errors  in  transportation 
charges  were  adjusted,  and  then  to  collect  them,  did  not  subject  the 
plaintiff  to  undue  or  unreasonable  prejudice  or  disadvantage  or  give 
to  others  similarly  situated  any  undue  or  unreasonable  preference 
or  advantage  within  the  meaning  of  section  3  of  the  interstate  com- 
merce law,  and  the  judgment  below  must  be  affirmed,. 
It  is  so  ordered.^ 


INTERSTATE  COMMERCE  COMMISSION  v.  DELAWARE, 
LACKAWANNA  AND  WESTERN  RAILROAD  CO. 

220  U.  S.  235.     1911.^ 

In  1899  the  railroads  in  the  so-called  Official  Classification  terri- 
tory adopted  the  following  rules : 

"  Rule  5-B.  In  order  to  entitle  a  shipment  to  the  carload  rate, 
the  quantity  of  freight  requisite  under  the  rules  to  secure  such 
carload  rate  must  be  delivered  at  one  forwarding  station,  in  one 
working  day,  by  one  consignor,  consigned  to  one  consignee  and 
destination,  except  that  when  freight  is  loaded  in  cars  by  consignor, 
it  will  be  subject  to  the  car-service  rules  and  charges  of  the  for- 
warding railroad.     (See  note.) 

"  Note.  Rule  5-B  will  apply  only  when  the  consignor  or  con- 
signee is  the  actual  owner  of  the  property. 

2  See  Allen  v.  Cape  Fear  &  Y.  V.  R.  R.  Co.  (1888).  100  N.  C.  397; 
Baltimore  &  O.  R.  R.  Co.  v.  Adams  Express  Co.  (1884),  22  Fed.  404; 
Yancy  v.  Batesville  Tel.  Co.  (1907),  81  Ark.  486;  Adams  Express  Co.  v. 
State   (1903),   161  Ind.  328. 

1  The  statement  of  facts  here  given  is  substituted  for  that  contained  in 
the  opinion,  and  the  arguments  of  counsel,  and  part  of  the  opinion  are 
omitted. — Ed. 


376  DISCRIMINATION.  [CHAP.   V. 

"  Eule  15-E.  Shipments  of  property  combined  into  packages  by 
forwarding  agents  claiming  to  act  as  consignors  will  only  be  ac- 
cepted when  the  names  of  individual  consignors  and  final  consignees, 
as  well  as  the  character  and  contents  of  each  package,  are  declared 
to  the  forwarding  railroad  agent,  and  such  property  will  be  way- 
billed  as  separate  shipments,  and  freight  charged  accordingly. 
(See  note.) 

"  Note.  The  term  '  forwarding  agents,'  referred  to  in  this  rule, 
shall  be  construed  to  mean  agents  of  actual  consignors  of  the  prop- 
erty, or  any  party  interested  in  the  combination  of  L.  C.  L.  ship- 
ments of  articles  from  several  consignors  at  point  of  origin." 

Certain  forwarding  agents,  against  whom  the  above  rules  had 
feeen  enforced,  appealed  to  the  Interstate  Commerce  Commission 
for  relief.  The  restriction  created  by  the  above  rules  were  de- 
clared void,  and  reparation  was  awarded.  The  railroad  companies 
did  not  comply  with  this  order,  but  filed  a  bill  to  enjoin  the  en- 
forcement of  the  order  and  to  have  it  declared  void. 

Mr.  Chief  Justice  White  delivered  the  opinion  of  the  court. 

As  shown  by  the  opinion  of  the  Commission  and  that  of  the 
two  members  who  dissented,  there  were  many  and  wide  differences 
in  the  views  expressed.  On  their  face,  however,  when  ultimately 
reduced,  they  will  be  found,  in  so  far  as  they  are  here  susceptible 
of  review,  to  rest  on  but  a  single  legal  proposition  ^  that  is,  the  right 
of  a  common  carrier  to  make  the  ownership  of  goods  tendered  to 
him  for  carriage  the  test  of  his  duty  to  receive  and  carry ;  or,  what 
is  equivalent  thereto,  the  right  of  a  carrier  to  make  the  ownership 
of  goods  the  criterion  by  which  his  charge  for  carriage  is  to  be 
measured.  We  say  the  contentions  all  reduce  themselves  to  this, 
because  in  their  final  analysis  all  the  other  differences,  in  so  far 
as  they  do  not  rest  upon  the  legal  proposition  just  stated,  are  based 
upon  conclusions  of  fact  as  to  which  the  judgment  of  the  Commis- 
sion is  not  susceptible  of  review  by  the  courts.  Baltimore  &  0.  E. 
Co.  V.  United  States  ex  rel.  Pitcairn,  215  U.  S.  481.  This  at  once 
demonstrates  the  error  committed  by  the  lower  court  in  basing  its 
decree  annulling  the  order  of  the  Commission  upon  its  approval  and 
adoption  of  the  reasons  stated  in  the  opinion  of  the  dissenting  mem- 
bers of  the  Commission.  This  follows,  since  the  reasons  given  by 
the  dissenting  members,  except  in  so  far  as  they  rested  upon  the 
legal  proposition  we  have  just  stated,  proceeded  upon  premises  of 
fact,  which,  however  cogent  they  may  have  been  as  a  matter  of  origi- 
nal consideration,  were  not  open  to  be  so  considered  by  the  court,  be- 
cause they  were  foreclosed  by  the  opinion  of  the  Commission. 
Doubtless  the  mistake  of  the  court  below  in  this  respect  was  occa- 
sioned by  overlooking  the  scope  of  tlie  Hepburn  act,  and  because  the 


DISCRIMINATION.  377 

decision  below  was  made  in  June,  1909,  before  the  announcement 
of  the  opinion  in  the  Pitcairn  Case.  The  reasons  above  stated  also 
serve  to  narrow  the  contentions  pressed  at  bar,  since  such  con- 
tentions likewise  in  their  essence  but  reiterate  the  conflict  of  opinion 
which  developed  in  the  Commission,  but  which,  for  the  reasons 
stated,  are,  for  the  purpose  of  our  review,  substantially  reducible  to 
the  one  legal  question  which  we  have  stated.  We  shall  therefore 
confine  ourselves  to  a  consideration  of  that  question  and  to  such 
brief  notice  of  the  other  contentions  urged  as  will  make  clear  that 
they  depend  ultimately  upon  conclusions  of  fact  not  open  in  this 
court  for  review. 

The  contention  that  a  carrier,  when  goods  are  tendered  to  him 
for  transportation,  can  make  the  mere  ownership  of  the  goods  the 
test  of  the  duty  to  carry,  or,  what  is  equivalent,  may  discriminate 
in  fixing  the  charge  for  carriage,  not  upon  any  difference  inhering 
in  the  goods  or  in  the  cost  of  the  service  rendered  in  transporting 
them,  but  upon  the  mere  circumstance  that  the  shipper  is  or  is 
not  the  real  owner  of  the  goods,  is  so  in  conflict  with  the  obvious 
and  elementary  duty  resting  upon  a  carrier,  and  so  destructive  of 
the  rights  of  shippers,  as  to  demonstrate  the  unsoundness  of  the 
proposition  by  its  mere  statement.     We  say  this  because  it  is  im- 
possible to  conceive  of  any  rational  theory  by  which  such  a  right 
could  be  justified  consistently  either  with  the  duty  of  the  carrier 
to  transport  or  of  the  right  of  a  shipper  to  demand  transportation. 
This  must  be,  since  nothing  in  the  duties  of  a  common  carrier 
by  the  remotest  implication  can  be  held  to  imply  the  power  to  sit 
in   judgment  on   the   title   of   the   prospective   shipper   who   has 
tendered  goods  for  transportation.     In  fact,  the  want  of  foundation 
for  the  assertion  of  such  a  power  is  so  obvious  that  in  the  argument 
at  bar  its  existence  is  not  directly  contended  for  as  an  original 
proposition,  but  is  deduced  by  implication  from  the  supposed  effect 
of  some  of  the  provisions  of  the  second  section  of  the  act  to  regulate 
commerce.     In  substance,  the  contention  is  that,  as  the  section 
forbids  a  carrier  from  charging  "a  greater  or  less  compensation 
for  any  service  rendered  or  to  be  rendered  in  the  transportation  of 
passengers  or  property,  .  .  .  than  it  charges,  demands,  collects,  or 
receives  from  any  other  person  or  persons  for  doing  for  him  or 
them  a  like  and  contemporaneous  service  in  the  transportation  of  a 
like  kind  of  traffic,  under  substantially  similar  circumstances  and 
conditions,"  authority  is  to  be  implied  for  basing  a  charge  for 
transportation  upon  ownership  or  nonownership  of  the  goods  ten- 
dered for  carriage,  upon  the  theory  that  such  ownership  or  non- 
ownership  is  a  dissimilar  circumstance  and  condition  within  the 
meaning  of  the  section. 


378  DISCRIMINATION.  [CHAP.   V. 

But  this  argi^ment,  in  every  conceivable  aspect,  amounts  only  to 
saying  that  a  provision  of  the  statute  which  was  plainly  intended 
to  prevent  inequality  and  discrimination  has  resulted  in  bringing 
about  such  conditions.  Moreover,  the  unsoundness  of  the  conten- 
tion is  demonstrated  by  authority.  It  is  not  open  to  question  that 
the  provisions  of  §  2  of  the  act  to  regulate  commerce  were  sub- 
stantially taken  from  §  90  of  the  English  Eailway  Clauses  Con- 
solidation Act  of  1845,  known  as  the  "  Equality  Clause."  Texas  & 
P.  R.  Co.  V.  Interstate  Commerce  Commission,  162  U.  S.  197,  222. 
Certain  also  is  it  that,  at  the  time  of  the  passage  of  the  act  to 
regulate  commerce,  that  clause  in  the  English  act  had  been  con- 
strued as  only  embracing  circumstances  concerning  the  carriage  of 
the  goods,  and  not  the  person  of  the  sender;  or,  in  other  words, 
that  the  clause  did  not  allow  carriers  by  railroad  to  make  a  differ- 
ence in  rates  because  of  differences  in  circumstances  arising  either 
before  the  service  of  the  carrier  began  or  after  it  was  terminated. 
It  was  therefore  settled  in  England  that  the  clause  forbade  the 
charging  of  a  higher  rate  for  the  carriage  of  goods  for  an  inter- 
cepting or  forwarding  agent  than  for  others.  Great  Western  R. 
Co.  V.  Sutton  (1869)  L.  R.  4  H.  L.  226;  Evershed  v.  London  & 
N.  W.  R.  Co.  (1878)  L.  R.  3  App.  Cas.  1029,  5  Eng.  Rul.  Cas. 
351,  and  Denaby  Main  Colliery  Co.  v.  Manchester,  S.  &  L.  R. 
Co.  (1885)  L.  R.  11  App.  Cas.  97.  And  it  may  not  be  doubted 
that  the  settled  meaning  which  was  affixed  to  the  English  equality 
clause  at  the  time  of  the  adoption  of  the  act  to  regulate  commerce 
applies  in  construing  the  second  section  of  that  act;  certainly  to 
the  extent  that  its  interpretation  is  involved  in  the  matter  before 
us.  Wight  V.  United  States,  167  U.  S.  512 ;  Interstate  Commerce 
Commission  v.  Alabama  Midland  R.  Co.  168  U.  S.  144,  166.        ^ 

As  these  considerations  are  decisive  of  the  only  legal  question 
which,  as  we  have  already  pointed  out,  the  case  involves,  and 
also  refute  a  subordinate  contention  that  a  forwarding  agent  is  not 
a  person  within  the  meaning  of  that  word  as  employed  in  the 
second  section  of  the  act  to  regulate  commerce,  we  are  brought,  as 
we  have  hitherto  said,  to  briefly  refer  to  minor  considerations 
pressed  in  argument,  so  far  as  they  seem  to  us  to  be  of  sufficient 
weight  to  be  entitled  to  particular  notice. 

First.  It  is  urged  that,  as  the  wide  range  of  carload  rates  and 
the  extent  of  the  facility  for  combining  articles  for  the  purpose 
of  obtaining  such  rates  allowed  in  Official  Classification  territory 
are  the  result  of  the  voluntary  act  of  the  railroads,  therefore  the 
power  existed  in  the  railroads  to  restrict  and  limit  the  enjoyment 
of  such  rate,  as  was  done  by  the  assailed  rules.  In  the  interest 
of  the  public  it  is  urged  a  limitation  should  not  be  now  enforced 


DISCRIMINATION.  379 

which  would  compel  the  carrier  to  withdraw  the  facilities  which 
shippers  enjoy  by  the  voluntary  act  of  the  carriers.  But  the 
proposition  rests  upon  the  fallacious  assumption  that  because  a 
carrier  has  the  authority  to  fix  rates,  it  has  the  right  to  discriminate 
as  to  those  who  shall  be  entitled  to  avail  of  them.  Moreover,  the 
contention  is  not  open  for  review,  because  the  legal  question  of  the 
right  of  the  carrier  to  consider  ownership  under  the  second  section 
having  been  disposed  of,  the  finding  of  the  Commission  that  to 
permit  the  enforcement  of  the  rule  would  give  rise  to  preferences 
and  engender  discriminations  prohibited  by  the  act  to  regulate  com- 
merce embodies  a  conclusion  of  fact  beyond  our  competency  to  re- 
examine. 

Secimd.  Conceding,  for  the  sake  of  the  argument,  the  correct- 
ness of  tilt  construe  tiun  which  we  have  given  to  the  second  sec- 
tion, it  is  urged  that  nevertheless,  as  a  forwarding  agent  is  a 
"  dealer  in  railroad  transportation,"  and  depends  for  his  profit 
in  carrying  on  his  business  upon  the  sum  which  can  be  made  by  him 
out  of  the  difference  between  the  carload  and  the  less  than  carload 
rate,  and  may  discriminate  between  the  persons  who  employ  him, 
therefore  the  act  to  regulate  commerce  should  be  construed  as  em- 
powering a  carrier  to  exclude  the  forwarding  agent  as  a  means  of 
preventing  such  discriminations.  But  in  the  absence  of  any  statu- 
tory authority  to  exclude  the  forwarding  agent,  and  basing  the 
right  to  exclude  merely  upon  the  assumption  that  the  nature  and 
character  of  his  business  would  produce  discrimination,  ajid  there- 
fore justify  the  exclusion,  the  contention  is  not  open  for  our 
consideration,  because,  like  the  previous  one,  it  is  foreclosed  by  the 
finding  of  fact  of  the  Commission.  Indeed,  this  is  not  merely  the 
result  of  an  implication  from  the  finding  of  the  Commission,  since 
it  was  affirmatively  found  that  to  permit  the  carrier  to  exclude  the 
forwarding  agent  would  be  to  produce  preference  and  discrimina- 
tion. The  contention,  then,  comes  to  this, —  that  carriers  should 
be  permitted  to  give  preferences  and  make  discriminations  as  a 
means  of  preventing  those  unlawful  conditions  from  arising. 

Third.  It  is  said  that  as  the  business  of  the  forwarding  agent  is 
in  a  sense  competitive  with  that  of  a  carrier,  and  may  largely 
diminish  the  revenue  derived  by  railroad  companies  from  their  less- 
than-carload  rates,  and  hence  cripple  their  ability  to  successfully 
conduct  business,  therefore  the  right  to  exclude  the  forwarding 
agent,  even  if  there  is  no  power  to  exclude  the  owner  or  the  ordinary 
agent  of  owners,  should  be  permitted.  This,  however,  again,  in 
a  twofold  sense,  is  directly  in  conflict  with  the  findings  of  fact 
made  by  the  Commission;  first,  because  it  disregards  the  findings 
as  to  the  operation  of  the  business  of  a  forwarding  agent,  and. 


380  DISCRIMINATION.  [CHAP.    V, 

second,  because  it  overlooks  the  express  finding  of  the  Commission 
that  it  would  be  so  difficult,  if  not  impossible,  for  the  carrier  to 
determine  in  practice  the  nature  and  character  of  the  title  of  a 
person  tendering  goods  for  shipment  that  the  necessary  result  of 
a  rule  excluding  a  forwarding  agent  would  be  to  embarrass  ship- 
ments by  owners  or  their  special  agents,  and  thus  beget  universal 
uncertainty  and  constant  discrimination  and  preference  against 
owners. 

As  it  follows,  from  the  reasons  just  stated,  that  the  court  below 
erred  in  annulling  the  order  of  the  Commission  and  enjoining  its 
enforcement,  its  decree  to  that  effect  is jeyersed,  and  the  case  is  re- 
manded, with  directions  to  dismiss  the  bill.^ 


EAILROAD  DISCEIMINATION  CASE. 

136  N.  C.  479.     1904.^ 

Clark,  C.  J.  The  gist  of  this  action  is  for  discrimination  by 
the  defendant  in  charging  the  plaintiff  a  higher  rate  on  logs  to 
the  plaintiff's  mill  in  Wilmington  than  was  charged  others  for 
like  service,  and  to  recover  the  overcharges,  which  had  been  paid 
under  protest.  (The  point  presented  is  not  that  the  rate  ($2.50 
per  thousand  feet  in  car-load  lots)  charged  the  plaintiff  is  per  se 
unreasonable,  but  that  the  rate  charged  others  for  the  same  service 
for  the  same  distance  was  $2.10,  and  that  this  is  a  serious  dis- 
crimination, which,  if  continued,  will  result  in  the  crippling  or 
destruction  of  the  plaintiff's  mill,  and  the  building  up  of  other 
mills  which  are  in  competition  with  the  plaintiff,  for  it  has  in  five 
months  amounted  to  $3,900,  for  the  recovery  of  which  this  action 
is  brought. 

The  court  charged  the  jury:  "  If  you  find  that  the  rate  of  $2.10 
per  thousand  feet  was  charged  and  collected  by  the  defendant  upon 
logs  shipped  over  any  part  of  its  railroad  to  a  mill  or  mills  at 
which  logs  were  manufactured  into  lumber,  and  the  lumber  itself 
reshipped  over  the  railroad  of  the  defendant,  or  any  part  of  it, 
and  that  the  reduced  rate  of  $2.10  per  thousand  feet  was  given 
to  such  mill  in  consideration  of  such  fact  that  they  would  ship 
the  lumber  manufactured  out  of  the  said  logs  over  the  line  of 
the  defendant's  road,  which  said  agreement  was  open  to  all  mills 
that  Avished  to  accept  it,  then  it  would  not  be  an  unjust  or  illegal 

2  Compare  Camblos  v.  Phil.  &  R.  R.  R.  Co.  (1873),  Fed.  Cas.  2,331,  and 
Johnson  v.  Dominion  Exp.  Co.    (1896),  28  Ontario,  203. 

1  Part  of  the  opinion  of  Clark,  C.  J.,  and  all  of  the  concurring  opinion 
of  Connor,  J.,  are  omitted. —  Ed. 


DISCRIMINATION.  381 

discrimination  to  charge  $2.50  per  thousand  feet,  which  it  is  not 
contested  is  a  reasonable  rate  to  mills  which  did  not  ship  their 
manufactured  lumber  over  the  line  of  the  defendant  road." 

/The  proposition  herein  stated  is  that  a  common  carrier  has  a  right 
to  charge  one  person  a  lower  rate  of  freight  than  another  for  ship- 
ping the  same  quantity  the  same  distance,  under  the  same  con- 
ditions, provided  the  shipper  give  the  company  a  consideration 
(shipping  the  manufactured  lumber  subsequently  over  its  line) 
which  its  managers  think  will  make  good  to  it  the  abatement  of 
rate  given  to  such  parties}  But  if  this  is  equality  as  to  the  treasury 
of  the  company,  it  is  none  the  less  a  discrimination  against  the 
plaintiff.  It  is  charged  $2.50  while  others  are  charged  $2.10  for 
the  same  service.  It  is  true,  if  the  plaintiff  should  choose  to 
agree  to  ship  its  manufactured  lumber  out  of  Wilmington  over 
the  defendant's  line,  it  could  get  the  same  reduction  of  rate  on  its 
logs  into  Wilmington.  On  those  conditions  it  could  save  itself 
from  being  discriminated  against.  But  suppose  the  plaintiff  should 
wish  to  sell  its  lumber  in  Wilmington,  or  can  ship  it  at  a  lower 
rate  by  sea,  or  even  by  a  competing  railroad  line  out  of  Wilmington, 
has  it  not  the  right  to  do  so?  Should  it  see  fit  to  exercise  that 
right,  has  the  common  carrier  the  power  to  place  a  penalty  of  a  19 
per  cent,  higher  rate  on  the  plaintiff,  and  to  charge  it  $2.50  for 
bringing  its  logs  to  Wilmington,  when  it  charges  others  $2.10  for 
exactly  the  same  service? 

The  principle  involved  is  a  vital  one  to  the  public  at  large,  for 
upon  this  alleged  right  to  discriminate  by  common  carriers,  ex- 
ercised either  openly  or  secretly  by  rebates,  nearly  all  trusts,  and 
especially  the  Standard  Oil  Company,  have  been  built  up  to  their 
present  disquieting  and  menacing  predominance,  as  has  been  fully 
shown  by  the  investigation  and  report  of  the  Industrial  Commis- 
sion and  the  Interstate  Commerce  Commission,  both  appointed  by 
acts  of  Congress. 

Here  the  railroad  company  will  doubtless  make  up,  out  of  its 
forced  monopoly  of  shipping  out  of  Wilmington  the  lumber  to  be 
manufactured  out  of  all  the  logs  hauled  in  by  it,  the  40  cents 
which  is  deducted  in  favor  of  those  who  will  give  it  that  monopoly. 
But  why  should  it  discriminate  by  charging  the  plaintiff  $2.50 
instead  of  $2.10;  i.  e.,  charge  19  per  cent,  higher  rates  upon  logs 
which  when  turned  into  lumber  are  sold  in  Wilmington,  or  shipped 
by  sea,  or  shipped  by  a  competing  route  ?  It  cost  no  more  to  bring 
in  the  plaintiff's  logs  than  the  logs  for  whose  hauling  only  $2.10 
was  charged.  The  shipment  of  logs  to  Wilmington  is  one  transac- 
tion. The  shipment  of  lumber  out  is  another.  J  The  defendant 
cannot  charge  the  plaintiff  higher  on  the  logs  because  it  will  not 


382  DISCRIMINATION.  [CHAP.   V. 

agree  to  ship  its  lumber  by  the  defendant's  line.  It  is  no  answer 
to  say  that,  if  the  plaintiff  will  come  to  the  defendant's  terms,  it 
will  get  the  same  discount.  The  defendant  might  as  well  say, 
"  If  you  will  carry  your  logs  to  a  sawmill  in  which  the  railroad 
company  is  a  large  owner,  you  will  get  19  per  cent,  reduction  in 
freight  on  your  logs,  and  there  is  no  discrimination,  for  the  same 
offer  is  open  to  you  as  to  others." 

If  the  plaintiff,  like  others,  was  shipping  logs  to  Wilmington  with 
the  voluntary  intention  of  shipping  by  the  defendant's  road,  say 
to  New  York,  then  certainly  there  would  be  no  discrimination. 
But  the  plaintiff  does  not  wish  to  ship  to  New  York  over  the 
defendant's  line,  and  the  defendant  proposes  "to  put  the  screws 
to  the  plaintiff,"  and  make  it  do  so,  whether  it  wislies  to  do  so  or 
not;  and,  if  the  plaintiff  does  not  do  so,  the  defendant  says  the 
plaintiff  cannot  be  treated  as  well  as  others  as  to  the  rates  for  haul- 
ing its  logs,  but  must  pay  nearly  one-fifth  (19  per  cent.)  higher 
rates  on  its  logs.  That  is  the  very  point  at  issue.  Hauling  its 
logs  to  Wilmington  is  the  only  service  the  plaintiff  seeks  at  the 
defendant's  hands.  Why  should  it  pay  higher  for  that  service 
than  those  who  agree  to  carry  their  logs  to  the  defendant's  mill, 
or  to  ship  out  their  lumber  by  the  defendant's  road  ? 

The  point  here  presented  has  been  often  decided,  and  always  — 
certainly  at  least  in  recent  years  —  against  the  power  claimed  by 
the  defendant.  In  Baxendale  v.  Railroad,  94  E.  C.  L.  308,  after 
an  elaborate  argument,  it  was  held  by  a  very  strong  court  as  to 
this  very  point :  "  It  is  not  a  legitimate  ground  for  giving  a 
preference  to  one  of  the  customers  of  a  railroad  company  that  he 
engages  to  employ  other  lines  of  the  company  for  the  carriage 
of  traffic  distinct  from,  and  unconnected  with,  the  goods  in  ques- 
tion; and  it  is  undue  and  unreasonable  to  charge  more  or  less 
for  the  same  service,  according  as  the  customer  of  the  railway 
thinks  proper,  or  not,  to  bind  himself  to  employ  the  company  in 
other  and  totally  distinct  business." 

In  Menacho  v.  Ward  (C.  C.)  27  Fed.  529,  where  the  court 
was  enlightened  by  the  argument  of  Frederick  Coudert  and  James 
C.  Carter  on  opposing  sides,  it  was  held  that  "  a  common  carrier 
cannot  charge  a  higher  rate  against  shippers  who  refuse  to  patronize 
it  exclusively."  ^ 

2  But  see  Hoover  v.  Pennsylvania  R.  R.  Co.  (1893),  156  Pa.  St.  220; 
Lough  V.  Outerbridge  (1894),  143  N.  Y.  271. 


DISCKIMINATION.  383 


BOEETH  V.  DETROIT  CITY  GAS  CO. 

152  Mich.  654.     1908.^ 

Carpenter,  J.  Did  the  making  of  a  60  cent  rate  to  those  who 
use  gas  engines  constitute  an  unjust  or  unlawful  discrimination  en- 
titling complainant  to  relief?  Defendant  does  discriminate  in  its 
charges  for  gas.  It  charges  those  who  use  gas  for  illuminating 
purposes  90  cents  per  1,000  cubic  feet;  those  who  use  it  for  fuel 
purposes  80  cents  per  1,000  cubic  feet ;  those  who  use  it  for  power 
60  cents  per  1,000  cubic  feet.  The  discrimination  between  the 
use  for  illuminating  purposes  and  fuel  purposes  was  authorized  by 
the  ordinance  of  the  city  of  Detroit.  The  discrimination  between 
the  use  for  fuel  purposes  and  the  use  for  power  purposes  was 
not  authorized  by  that  ordinance.  The  ground  of  that  discrimina- 
tion is  this:  That  those  who  use  gas  for  power  purposes  use  on 
an  average  much  more  than  those  who  use  it  for  fuel  purposes,  and 
that  if  they  could  not  get  it  at  the  reduced  rate  they  would  use 
some  other  material  for  the  purpose  of  creating  power.  Counsel 
for  each  party  have  elaborately  briefed  the  question  of  the  lawful- 
ness of  this  discrimination.  We  shall  not,  however,  undertake  to 
decide  that  question.  It  is  not  necessary  to  decide  it  in  order  to 
determine rthis  case.  The  question  is  not  likely  to  arise  again,  for 
since  this  suit  was  commenced  a  new  ordinance  has  been  passed  by 
the  city  of  Detroit  authorizing  that  discrimination. 

We  do  not  undertake  to  decide  the  unlawfulness  of  the  discrimina- 
tion in  question,  because,  in  our  judgment,  it  affords  no  ground 
upon  which  complainant  is  entitled  to  relief.  Complainant  is  not 
entitled  to  relief  because  the  rate  of  80  cents  per  1,000  cubic 
feet  is  too  high,  for  that  was  the  rate  which  defendant  was  entitled 
to  charge.  His  claim  for  relief  must  rest  upon  the  ground  that 
the  rate  charged  those  who  used  gas  for  power  purposes  is  too 
low.  He  cannot  complain  of  tiiis  unless  he  is  in  some  way 
injured.  The  circumstance  that  a  manager  of  a  public  utility  is 
granting  unlawful  favors  to  one  of  several  individuals  —  and  we 
do  not  decide  that  that  was  done  in  this  case  —  does  not  give  a 
right  of  action  to  every  member  of  the  community.  That  is  a 
grievance  to  be  redressed  by  the  public.  On  principle  it  cannot 
be  redressed  by  an  individual  unless  he  is  specially  aggrieved 
thereby.  As  was  said  in  Hays  v.  Penn.  Co.  (C.  C.)  12  Fed.  309: 
"  It  may  be  said  that  it  is  only  when  the  discrimination  inures 
to  the  undue  advantage  of  one  man  in  consequence  of  some  injustice 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


384  DISCRIMINATION.  [CHAP.    V. 

inflicted  on  another  that  the  law  interferes  for  the  protection  of 
the  latter."  See,  also,  Hozier  v.  Caledonian  Ey.  Co.,  17  Sess. 
Cases  (2d  series)  303.  The  users  of  gas  engines  who  receive 
the  reduced  rates  were  in  no  just  sense  competitors  of  complainant. 
The  reduced  rates  gave  them  no  undue  advantage  over  him.  They 
did  not  injure  him.  They,  therefore,  afford  no  ground  upon 
which  he  can  claim  relief. 

The  decree  dismissing  complainant's  bill  is  affirmed.^ 


M'NEILL  V.  DURHAM  AND  CHAELOTTE  EAILEOAD  CO. 

132  N.  C.  510.     1903.^ 

Clark,  C.  J.  This  is  an  action  for  personal  injuries  alleged  to 
have  been  received  by  the  plaintiff  April  G,  1900,  by  negligence 
of  the  defendant,  while  traveling  on  its  road.  The  defendant,  in 
its  answer,  among  other  things,  avers  that  the  plaintifE  was  a 
"trespasser  on  its  train,  having  tendered  to  defendant  no  ticket, 
money,  or  compensation  whatever  for  its  fare  —  only  a  free  pass, 
which  had  expired  1st  January  previously  by  its  own  limitation," 
and  which  further  had  on  its  back  a  stipulation  exempting  the 
company  from  liability  under  all  circumstances  for  injury  to  his 
person,  or  loss  or  damage  to  his  baggage.  The  plaintiff  testified 
that  he  was  "editor  of  the  Carthage  Blade,  a  newspaper' published 
at  Carthage.  In  1899  I  made  a  contract  with  the  defendant  to 
publish  its  time-table  in  my  paper,  as  the  consideration  for  the 
pass.  I  did  publish  the  time-table,  and  the  defendant  agreed  to 
continue  the  contract  and  renew  the  pass  for  1900."  It  is  true, 
he  said  he  told  the  conductor  he  would  pay  the  fare ;  but,  upon  his 
making  the  above  statement,  the  conductor  accepted  him  as  a  free 
passenger. 

(^Upon  this  evidence  the  motion  for  judgment  as  of  nonsuit 
should  have  been  granted.  There  is  no  lawful  contract  of  passage, 
and  the  only  right  the  plaintiff  could  claim  against  the  defendant 
is  that  the  defendant  should  not  willfully  and  wantonly  injure 
him.)  Cook  V.  Eailroad,  128  N.  C.  333,  38  S.  E.  925.  The  Gen- 
eral Assembly  (Laws  1891,  p.  277,  c.  320,  §  4)  provided  that  "  if 
any  common  carrier  subject  to  the  provisions  of  this  act  shall  di- 
rectly or  indirectly  by  any  special  rate,  rebate,  drawback  or  other 
device,  charge,  demand,  collect  or  receive  from  any  person  or 
persons  a  greater  or  less  compensation  for  any  service  rendered 

2  Compare  Bailey  v.  Fayette  G.  &  F.  Co.  (1899),  193  Pa.  St.  175;  Com- 
monwealth V.  Louisville  &  N.  R.  R.  Co.   (1902),  112  Ky.  75. 

1  Part  of  the  opinion  is  omitted. —  Ed. 


DISCRIMINATIOX.  385 

or  to  be  rendered  in  the  transportation  of  passengers  or  property 
subject  to  the  provisions  of  this  act  than  it  charges,  demands  or 
receives  from  any  other  person  or  persons  for  doing  for  him  or 
them,  a  like  and  contemporaneous  service  in  the  transportation 
of  a  like  kind  of  traffic  under  substantial  similar  circumstances 
and  conditions  such  common  carrier  shall  be  deemed  guilty  of  un- 
just  discrimination."     Section    25   of    said   chapter    (page    386) 
contains  the  exceptions  which  permit  handling  free  and  at  reduced 
rates  property  of  the  United  States,  state  or  municipal  governments, 
or  for  charitable  purposes,  or  to  or  from  fairs,  and  at  exhibits 
thereat,  and  permits  "  the  free  carriage  of  destitute  and  homeless 
persons  transported  by  charitable  societies,  and  the  necessary  agents 
employed  in  such   transportation,   or  the   free   transportation  of 
persons  traveling  in  the  interest  of  orphan  asylums  or  any  depart- 
ment thereof,  or  the  issuance  of  mileage,  excursion  or  commuta- 
tion passenger  tickets.     Nothing  in  this  act  shall  be  construed  to 
prohibit  any  common  carrier  from  giving  reduced  rates  to  min- 
isters of  religion,  or  to  municipal  governments  for  the  transporta- 
tion of  indignant  persons,  or  to  inmates  of  national  homes  or 
state  homes  for  disabled  volunteer  soldiers  and  of  soldiers'  and 
sailors'  orphan  homes,  including  those  about  to  enter  and  those  re- 
turning home  after  discharge,  under  arrangement  with  the  boards 
of  managers  of  said  homes :  nothing  in  this  act  shall  be  construed 
to  prevent  railroads  from  giving  free  carriage  to  their  own  officers 
and  employees,  or  to  prevent  the  principal  officers  of  any  railroad 
company  or  companies  from  exchanging  passes  or  tickets  with  other 
railroad  companies  for  their  officers  or  employees."     These  excep- 
tions are  very  liberal,  but  they  do  not  embrace  newspaper  editors. 
Subject  to   the  liberal  exceptions   just  recited,   the   General   As- 
sembly deemed  that  free  transportation  or  any  other  discrimina- 
tion was  so  much  against  public  policy  that  a  violation  of  the 
statute  was  made  punishable  with  a  fine  "  not  exceeding  five  thou- 
sand dollars"  for  each  offense.     Nothing  could  be  more  clearly 
a  discrimination  than  the  ground  upon  which  the  plaintiff  asked  for 
and  received  free  passage  on  this  occasion,  to  wit,  that  for  the 
year  previous  he  had  advertised  the  schedule  of  the  defendant 
company  in  his  paper,  and  had  received  therefor  a  free  pass  over 
its  line  for  the  previous  year,  and  this  contract  had  been  renewed 
for  the  year  then  current.     It  does  not  appear  what  was  the  value 
•  of  the  advertising  done,  charging  for  the  space  at  the  same  rates 
as  would  be  charged  others;  but,  let  it  be  what  it  may,  it  could 
not  amount  exactly  — "  neither  more  nor  less  " —  to  the  value  of  a 
free  pass  to  travel  aci  lihitum  an  unstipulated  number  of  miles 
over  the  defendant's  road.     Besides,  it  was  an  illegal  discrimina- 


386  DISCRIMINATION.  [CHAP.    V. 

tion  to  sell  the  plaintiff  transportation  on  credit,  and  not  payable 
in  money. 

The  plaintiff  knew  that  the  defendant  had  no  right  to  make  a 
contract  with  him  to  transport  him  free  an  unlimited  number  of 
miles  for  an  advertisement  which  in  any  aspect  would  not  be  the 
exact  rate  charged  all  other  passengers.  He  knew  that  the  statute 
denounced  such  attempted  contract  as  unlawful  and  punishable 
Avith  a  fine  "  not  less  than  one  thousand  nor  more  than  five  thousand 
dollars."  While  the  plaintiff  was  not  himself  made  indictable,  as 
in  some  states,  he  knew  that  the  contract  was  unlawful,  and  he 
cannot  now  come  into  a  court  of  justice  and  ask  that  the  court 
shall  give  him  compensation  for  damages  sustained  by  the  negli- 
gent breach  of  the  contract  of  safe  carriage.  That  presupposes 
a  lawful  contract,  and  he  knew  that  this  was  an  unlawful  con- 
tract. He  and  the  defendant  are  in  pari  delicto,  and  the  court  will 
leave  the  parties  to  settle  their  own  controversy  over  damages  for 
a  breach  of  a  contract  forbidden  by  law. 

In  Cook  V.  Eailroad,  128  N.  C.  333,  38  S.  E.  925,  a  tramp  was 
stealing  a  ride.     He  was  on  the  train  unlawfully.     In  Pierce  v. 
Eailroad,  124  N.  C.  83,  32  S.  E.  399,  41  L.  K.  A.  316,  a  boy 
had  jumped  on  a  switching  train,  and  was  riding  thereon,  contrary 
to  the  town  ordinance.     The  court  held  that  the  company  was 
liable  in  such  cases  only  for  any  willful  or  wanton  injury  inflicted 
by  the  employees  of  the  company.     Here  the  plaintiff  was  on  the 
train  illegally,  and  against  a  prohibition  more  severe  than  the  vio- 
lation of  a  town  ordinance  against  the  boy,  or  the  stealing  of  a  ride 
by  a  tramp.     To  same  purport,  Eichmond  &  D.  R.  Co.  v.  Burnseed 
(Miss.)  35  Am.  St.  Eep.  656,  and  notes;  Hardyer  v.  E.  Co.,  45 
Kan.  379,  25  Pac.  893,  and  cases  cited.     The  plaintiff  is  an  edu- 
cated, reputable  gentleman  —  a  member  of  an  honorable  profession ; 
but,  being  on  the  cars  illegally,  seeking  free  transportation,  or  at 
least  discrimination  in  rates,  contrary  to  the  prohibition  of  the 
statute,  his  rights  as  against  the  company  are  the  same  as  those 
others  who  were  also  riding  contrary  to  law.     He  neither  shows 
nor  avers  willful,  wanton,  or  malicious  injury,  and  cannot  recover. 
We  were  cited  to  many  authorities  holding  ineffectual  stipulations 
upon  the  back  of  free  passes  exempting  the  common  carrier  from 
liability  for  injuries  sustained  by  the  holder  thereof.     These  au- 
thorities are  conflicting,  4  Elliott,  E.  E.   §   1608,  and  can  only 
be  considered  when  the  pass  is  issued  in  one  of  the  cases  permitted 
by  our  statute.     They  have  no  application  to  a   case  like  this, 
where  the  contract  of  free  carriage  is  illegal,  and  the  parties  are  in 
pari  delicto. 

This  is  the  first  case  in  which  the  illegal  discrimination  is  set 


DISCRIMINATION".  387 

Tip  by  the  common  carrier,  but  it  so  happens  that  by  the  lapse  of 
time  it  is  now  protected  from  indictment  by  the  statute  of  limita- 
tions. 

In  refusing  to  grant  judgment  as  of  non-suit,  there  was  error. 

Douglas,  J.  (dissenting).  I  am  inclined  to  tliink  that  in  pari 
delicto  is  not  a  defense  to  a  tort  arising  from  the  negligence  of  the 
defendant.^ 


UNITED  STATES  v.  BALTIMOEE  AND  OHIO  EAILEOAD 

CO. 

231  U.  S.  274.     1913.^ 

Mr.  Justice  Lurton  delivered  the  opinion  of  the  court. 

This  appeal  involves  the  legality  of  an  order  made  by  the  Inter- 
state Commerce  Commission,  holding  that  certain  allowances  made 
by  the  appellees  to  Arbuckle  Brothers  on  sugar  shipped  by  them 
over  one  or  another  of  the  railroad  companies'  lines  constitute  an 
illegal  preference  or  discrimination  in  violation  of  the  act  to  regu- 
late commerce.  The  order  of  the  Commission  required  the  rail- 
road companies  to  cease  and  desist  from  paying  such  allowances, 
"  while  at  the  same  time  paying  no  such  allowances  to  the  Federal 
Sugar  Refining  Company,"  on  its  sugar  brought  by  it  on  lighters 
to  the  carriers  at  the  same  rail  terminals.  20  Inters.  Com.  Eep. 
200.  The  carriers  affected  filed  a  bill  in  the  Commerce  Court, 
alleging  the  invalidity  and  illegality  of  the  order,  and  sought  an  in- 
junction pendente  lite  and  a  permanent  injunction  against  its  en- 
forcement. An  injunction  until  the  cause  could  be  finally  heard 
was  granted  by  the  Commerce  Court.  This  was  appealed  from 
by  the  United  States  and  the  injunction  sustained  as  within  the 
sound  discretion  of  the  court  below.  225  U.  S.  306.  Thereupon 
the  cause  was  fiinally  heard  upon  motion  of  the  appellants  to  dismiss 
the  bill  for  want  of  equity,  all  answers  and  pleas  theretofore  filed 
having  been  withdrawn.  The  Commerce  Court  denied  this  motion 
and  sustained  the  equity  of  the  bill.  The  appellants  declining  to 
further  defend,  the  temporary  injunction  was  made  permanent. 
From  that  decree  this  appeal  is  prosecuted. 

The  situation  out  of  which  the  questions  for  decision  arise,  shortly 
stated,  is  this: 

The  railroad  companies  held  by  the  Interstate  Commerce  Com- 
mission to  have  discriminated  in  favor  of  Arbuckle  Brothers  and 

2  See  United  States  v.  Chicago,  I.  &  L.  R.  Co.  (1908),  163  Fed.  114; 
State  V.  Union  P.  R.  R.  Co.   (1910),  87  Neb.  29. 

1  The  arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


388  DiscKiMiNATioisr.  [chap.  v. 

against  the  Federal  Sugar  Eefining  Company  are  interstate  trunk 
lines  whose  freight  rail  terminals  are  at  the  New  Jersey  shore  of  the 
harbor  of  New  York.  Transportation  of  freights  into  and  out  of 
the  city  of  New  York  is  practicable  only  by  means  of  car  floats, 
barges,  and  steam  lighters,  operating  between  the  city  and  the  New 
Jersey  shore. 

To  meet  this  condition  the  appellee  railroads  have  long  held 
themselves  out  as  extending  transportation  of  freights  bound  east 
to  a  defined  area  along  the  river  front  of  the  city,  and  as  beginning 
such  transportation  westbound  when  freight  is  delivered  at  desig- 
nated points  within  the  same  area.  The  necessary  lighterage  service 
is  performed  without  additional  cost  or  charge,  the  flat  rate  into  or 
out  from  such  points  being  identical  with  that  applicable  at  the 
New  Jersey  rail  terminals.  The  limits  within  which  such  lighter- 
age service  is  performed  as  a  part  of  the  transportation  assumed 
have  long  been  defined  and  published  in  the  several  filed  rate  sheets 
of  the  carriers.  The  district  embraces  substantially  the  commer- 
cial and  manufacturing  river  front  of  Greater  New  York,  and 
within  it  the  railroads  hold  themselves  out  as  undertaking  to 
receive  or  deliver  freight  at  any  public  dock,  or  at  any  accessible 
private  dock  where  the  shipper  shall  arrange  for  the  use  of  the 
dock.  Within  this  lighterage  zone  each  of  the  appellees  has  es- 
tablished and  long  maintained  public  freight  terminal  stations,  at 
which  it  will  deliver  eastbound  freights  and  receive  freights  bound 
west.  Some  of  these  stations  are  owned  or  managed  solely  by  one 
of  the  railroads,  and  some  are  union  stations  operated  for  the 
joint  use  of  two  or  all  of  the  railroads.  Some  of  them  are  operated 
by  third  persons,  who  manage  and  operate  them  under  contracts 
as  agents  for  one  or  more  of  the  railroads.  But  whether  operated 
under  contract  or  directly  by  the  company  or  companies  using 
them,  they  are  represented  to  be  public  delivery  and  receiving  sta- 
tions, and  are  so  set  out  in  the  filed  tariff  sheets  of  the  companies 
interested. 

The  "  allowance  "  to  Arbuckle  Brothers  referred  to  in  the  order 
of  the  Commission  is  the  consideration  paid  by  the  railroad  com- 
panies to  them  for  instrumentalities  and  facilities  furnished  and 
services  performed  in  the  maintenance  of  one  of  these  public  sta- 
tions, known  as  the  Jay  Street  terminal,  and  for  the  lighterage 
of  all  freight  between  that  station  and  the  railroad  terminals  on 
the  New  Jersey  shore.  Arbuckle  Brothers,  a  copartnership,  are 
large  refiners  of  sugar  and  dealers  in  coffee.  Much  of  their  product 
of  sugar  finds  a  market  in  the  west  at  points  upon  the  lines  of  the 
railroads  here  involved.  Their  refinery  is  upon  the  water  front  of 
Brooklyn.     They  also  own  a  contiguous  property  fronting  upon 


DISCRIMINATION.  389 

East  Elver  some  1,200  feet.  Upon  this  property  they  have  erected 
a  dock,  piers,  and  large  warehouses  for  the  receipt  of  freight  in- 
tended for  transportation  to  the  railroad  terminals  on  the  New 
Jersey  shore,  or  received  from  such  terminals  for  consignees  nearby. 
They  also  own  steam  lighters,  car  floats,  barges,  etc.,  constructed  for 
the  transfer  of  cars,  loaded  or  unloaded,  between  this  dock  and  the 
New  Jersey  terminals.  The  premises  were  peculiarly  adapted  for 
use  as  a  public  union  freight  station,  and  for  the  purpose  of  ex- 
tending transportation  by  their  several  lines  to  this  portion  of  the 
commercial  and  manufacturing  water  front  of  Greater  New  York, 
the  appellee  railroad  companies,  in  1906,  entered  into  separate,  but 
identical,  contracts  with  Arbuckle  Brothers,  the  latter  contracting 
under  the  business  name  and  style  of  "  The  Terminal  Company." 
The  contracts  are  too  lengthy  to  be  set  out.  Their  essential  points 
may  be  thus  summarized : 

1.  The  Terminal  Company  agrees  to  maintain  the  premises  in 
good  order  and  condition  for  the  receipt  of  freight,  and  to  pro- 
vide all  necessary  boats,  car  floats,  docks,  and  piers,  adequate  at 
all  times  to  receive,  discharge,  transfer,  and  deliver  freights,  loaded 
and  unloaded,  adequate  to  accommodate  the  business  contemplated. 

2.  The  Terminal  Company  will  receive  at  the  New  Jersey  ter- 
minals all  freights,  in  or  out  of  cars,  intended  for  delivery  at  the 
aforesaid  freight  station,  and  safely  convey  the  same  to  the  premises, 
and  there  make  delivery  to  the  consignees.  It  will  also  receive 
and  load  into  cars  all  freights  which  may  be  delivered  to  it  at 
its  said  premises  for  transportation  over  the  lines  of  any  of  said 
railroad  companies,  and  carry  and  deliver  the  same  to  said  railroad 
company's   New   Jersey   rail   terminals. 

3.  For  the  facilities  supplied  and  the  services  performed  each  of 
the  railroad  companies  agrees  to  pay  on  freight  in  and  out  of  the 
station,  a  compensation  measured  by  the  tonnage  handled  for 
each  such  railroad  at  4%  cents  per  hundred  pounds  on  freight 
originating  at  or  destined  to  points  west  of  what  is  called  "  trunk 
line  territory,"  and  on  freight  originating  at  or  destined  to  points 
east  thereof,  3  cents  per  hundred  pounds. 

Under  these  contracts,  consignments  to  or  by  Arbuckle  Brothers 
are  handled  in  the  same  manner  as  the  shipments  of  the  general 
public,  and  comprise  a  part  of  the  tonnage  in  and  out  of  that  sta- 
tion by  which  the  compensation  paid  to  the  Terminal  Company 
is  measured.  This  fact  was  the  basis  of  the  complaint  made  by 
the  Federal  Sugar  Refining  Company,  whose  sugar  seeks  the  same 
market,  and  who  claimed  that  as  it  lightered  its  sugar  from  its 
own  shipping  dock  to  the  terminals  at  the  New  Jersey  shore,  the 
so-called  "  allowance  "  made  in  respect  to  the  sugar  of  Arbuckle 


390  DISCRIMINATION".  [CHAP.   V. 

Brothers,  handled  under  the  contracts  referred  to  above,  was  an 
unjust  and  an  illegal  discrimination  unless  a  like  allowance  was 
made  to  it. 

The  order  of  the  Commission  does  not  forbid  the  allowance  to  ■ 
Arbuckle  Brothers  as  in  itself  illegal  or  unreasonable,  but  forbids 
it  only  as  a  discrimination  unless  a  like  allowance  is  made  to  the 
Federal  Sugar  Eefining  Company.  That  there  is  no  undue  dis- 
crimination against  the  Federal  Sugar  Refining  Company  in  refus- 
ing to  make  a  like  allowance  to  it  will  appear  when  the  conceded 
circumstances  and  conditions  are  considered.  This  latter  company 
is  a  competitor  of  Arbuckle  Brothers  in  the  sale  and  shipment  of 
sugar  to  the  same  markets.  Its  refinery  is  located  at  Yonkers 
on  the  Hudson  river,  a  point  some  10  miles  beyond  the  limits  of 
the  free  lighterage  district.  It  owns  its  docks  and  piers  upon  the 
river,  but  has  never  enjoyed  the  free  lighterage  privilege  accorded 
to  all  shippers  from  docks  and  piers  inside  the  free  zone  under 
the  tarifE  sheets  of  the  carriers.  It  has  therefore  been  compelled 
to  furnish  its  own  means  for  lightering  shipments  from  its  docks 
to  the  New  Jersey  shore.  This  is  an  undoubted  disadvantage  in 
competing  with  Arbuckle  Brothers,  as  well  as  with  all  other  refiners 
and  shippers  of  sugar  within  the  lighterage  district. 

Assuming,  then,  that  the  lighterage  service  performed  by  the 
Federal  Sugar  Refining  Company  was  a  service  by  it  for  its  own 
convenience,  for  which  the  railroads  were  under  no  obligation  to 
make  compensation,  we  come  to  the  question  whether  the  facilities 
employed  and  the  service  performed  by  Arbuckle  Brothers  in  re- 
spect to  their  own  sugar  after  delivery  at  the  Jay  Street  terminal 
are  accessorial,  or  services  in  aid  of  railroad  transportation,  for 
which  they  may  be  paid  a  reasonable  compensation  without  dis- 
criminating unduly  against  the  Federal  Sugar  Refining  Company. 

That  the  plain  purpose  of  the  contracts  between  the  several  rail- 
road companies  and  the  Terminal  Company  was  to  constitute  the 
dock  and  warehouses  of  that  company  a  public  freight  station  is 
too  clear  for  extended  discussion.  That  the  premises  became  such 
a  depot  through  contract  with  the  owners,  and  not  by  virtue  of  a 
fee-simple  title  or  a  lease,  is  of  no  legal  significance.  Railroad 
Commission  v.  Louisville  &  N.  E.  Co.  10  Inters.  Com.  Rep.  175; 
Cattle  Raisers'  Asso.  v.  Chicago,  B.  &  Q.  R.  Co.  11  Inter.  Com.  Rep. 
277. 

We  must  now  recur  to  the  distinction  drawn  by  the  Commission 
between  the  compensation  paid  by  the  railroad  companies  to  Ar- 
buckle Brothers  for  the  instrumentalities  furnished  and  the  service 
performed  by  them  in  respect  of  their  own  westbound  shipments  of 
sugar,  and  the  compensation  paid  to  them  in  respect  to  the  freight 


DISCRIMINATION'.  391 

handled  by  them  through  tlieir  station  for  the  general  public.  The 
Commission  find  no  fault  with  reference  to  the  compensation  paid 
for  the  latter,  but  do  find  that  the  compensation  paid  for  the 
former  is  an  undue  discrimination  unless  a  like  compensation  is 
made  to  the  Federal  Sugar  Refining  Company  for  the  lighterage 
of  its  sugar. 

We  have  before  noticed  that  the  order  of  the  Commission  is  in  the 
alternative.  The  obvious  inference  is  that  the  Commission  found 
nothing  unlawful  per  se  in  the  compensation  paid  to  Arbuckle 
Brothers  under  the  contract,  although  they  are  compensated  upon 
a  gross  tonnage  which  includes  their  own  sugar,  for  it  sanctions 
its  continuance  upon  condition  that  a  like  allowance  shall  be  paid 
upon  the  sugar  lightered  by  the  Federal  Sugar  Refining  Company. 
Penn.  Ref.  Co.  v.  Western  Xew  York  &  P.  R.  Co.  208  U.  S.  208, 
218. 

But,  as  has  already  been  shown,  the  railroads  were  under  no 
obligation  to  lighter  the  sugar  of  the  Federal  Sugar  Refining  Com- 
pany. Upon  the  other  hand,  if  the  lighterage  of  the  Arbuckle 
sugar  was  included  in  the  through  rate  from  the  Jay  Street  station, 
and  a  part  of  the  transportation  which  the  railroads  were  under 
obligation  to  perform,  and  that  lighterage  was  done  by  Arbuckle 
Brothers  at  the  instance  and  procurement  of  the  carriers,  they, 
as  owners  of  the  freight  thus  transported,  were  entitled  to  demand 
a  compensation  reasonably  commensurate  with  the  facilities  fur- 
nished and  the  services  performed.  Wight  v.  United  States,  167 
U.  S.  513;  General  Electric  Co.  v.  New  York  C.  &  H.  R.  R.  Co.  14 
Inters.  Com.  Rep.  237;  Interstate  Commerce  Commission  v.  Diffen- 
baugh,  222  U.  S.  42,  46.     In  the  case  last  cit^d,  it  is  said : 

"  The  act  of  Congress  in  terms  contemplates  that  if  the  carrier 
receives  services  from  an  owner  of  property  transported,  or  uses 
instrumentalities  furnished  by  the  latter,  he  shall  pay  for  them. 
That  is  taken  for  granted  in  §  15;  the  only  restriction  being,  that 
he  shall  pay  no  more  than  is  reasonable,  and  the  only  permissive 
element  being  that  the  Commission  may  determine  the  maximum 
in  case  there  is  complaint  (or  now,  upon  its  own  motion.  Act 
of  June  18,  1910,  chap.  309,  §  12,  36  Stat,  at  L:  539,  551,  U.  S. 
Comp.  Stat.  Supp.  1911,  p.  1301).  As  the  carrier  is  required  to 
furnish  this  part  of  the  transportation  upon  request,  he  could  not 
be  required  to  do  it  at  his  own  expense,  and  there  is  nothing  to 
prevent  his  hiring  the  instrumentality  instead  of  owning  it." 

That  the  compensation  of  three  and  four  and  one-fifth  cents 
per  hundred  pounds  upon  the  total  tonnage  in  and  out  of  this 
station  is  not  unreasonable  was  and  is  not  challenged,  and  therefore 
we  pass  that  subject  by. 


392  DISCRIMINATION.  [CHAP.    V. 

Yiewing  the  whole  ease  in  a  broad  light,  it  is  apparent  that  the 
disadvantage  under  which  the  Federal  Sugar  Eefining  Company 
labors  is  one  which  arises  out  of  its  disadvantageous  location. 
That  disadvantage  would  still  remain  if  the  title  to  the  Jay  Street 
station  was  in  the  railroad  companies,  and  its  business  in  charge 
of  a  third  person. 

We  fail  to  find  any  error  in  the  decree  of  the  Commerce  Court 
holding  the  order  of  the  Commission  void,  and  its  decree  is  ac- 
cordingly approved. ' 


CHAPTER  VI. 
DUTY  TO  FUENISH  ADEQUATE  FACILITIES. 

JACKSON  V.  VIEOmiA  HOT  SPRINGS  CO. 

209  Fed.  979.     1913.^ 

McDowell,  District  Judge.  This  is  an  action  of  trespass  on 
the  case  against  an  innkeeper,  brought  by  a  proposing  guest  who 
was  refused  accommodation.  The  original  declaration  was  de- 
murred to  for  several  reasons,  but  it  has  become  unnecessary  to 
discuss  any  of  the  grounds  of  demurrer  except  the  failure  of  the 
pleader  to  allege  that  the  defendant  at  the  time  in  question  had 
room  for  the  plaintiff. 

The  general  rule  in  common-law  pleading  is  that  it  is  not  nec- 
essary to  state  matter  which  would  come  more  properly  from  the 
other  side.  Heard's  Stephen  PI.  (9th  Am.  Ed.)  p.  349.  It 
is  also  not  necessary  and,  as  a  rule,  is  improper,  to  anticipate  and 
deny  or  avoid  matter  of  defense.  31  Cyc.  109.  But  it  is  neces- 
sary to  allege  at  least  a  prima  facie  case.  Heard's  Stephen  PI.,  p. 
351  [352]. 

The  duty  of  the  innkeeper  to  furnish  lodging  does  not  exist  if 
his  accommodations  are  exhausted.  In  2  Chitty  PI.  (16th  Am. 
Ed.)  p.  531,  it  is  said: 

"  An  innkeeper  is  bound  by  the  custom  of  the  realm  to  receive 
travelers  and  guests  at  all  hours  and  times  if  they  tender  and 
are  ready  to  pay  the  customary  charge,  are  in  a  fit  and  proper  con- 
dition as  to  conduct  and  health,  and  if  there  is  accommodation 
for  them." 

In  Justice  Harlan's  dissent  in  the  Civil  Rights  Cases,  109  U.  S. 
40,  3  Sup.  Ct.  43,  27  L.  Ed.  835,  the  following  is  quoted: 

"  An  innkeeper  is  bound  to  take  in  all  travelers  and  wayfaring 
persons,  and  to  entertain  them,  if  he  can  accommodate  them,  for 
a  reasonable  compensation.  .  .  ."     Story,  Bailments,  §§  475,  476. 

And  again : 

"  In  Eex  V.  Ivens,  7  Carr.  &  P.  213,  32  E.  C.  L.  495,  the  court 
speaking  by  Mr.  Justice  Coleridge,  said :  '  An  indictment  lies 
against  an  innkeeper  who  refuses  to  receive  a  guest,  he  having  at 

1  Part  of  the  opinion  is  omitted. —  Ed. 


394  ADEQUATE    FACILITIES.  [CHAP.   VI. 

the  time  room  in  his  house;  and  either  the  price  of  the  guest's 
entertainment  being  tendered  to  him  or  such  circumstances  occur- 
ring as  will  dispense  with  that  tender.' " 

In  16  Am.  &  Eng.  Ency.  (3d  Ed.)  p.  525,  it  is  said: 

"  If  an  innkeeper  improperly  refuses  to  receive  and  entertain 
any  person  coming  to  the  inn  as  a  guest,  he  is  liable,  in  conse- 
quence of  such  unlawful  act,  to  an  action  by  the  injured  party  for 
damages." 

In  22  Cyc.  1074,  it  is  said : 

"  An  innkeeper,  as  one  carrying  on  a  public  employment,  is 
obliged  to  receive  all  travelers  who  properly  apply  to  be  admitted, 
provided  he  has  room  and  they  pay  his  reasonable  charges.", 

And  quotations  of  this  same  purport  could  be  added  almost 
indefinitely. 

The  only  forms  for  pleading  in  such  cases  that  I  know  of  are 
found  in  2  Wharton's  Precedents  of  Indictments,  911,  and  in  Haw- 
thorn V.  Hammond,  1  Carrington  &  Kirwan,  404,  47  E.  C.  L.  403, 
which  is  cited  by  Chitty  (2  PL  [16th  Am.  Ed.]  p.  533)  as  a 
precedent.  In  the  indictment,  as  in  the  declaration  in  case,  it 
is  alleged  that  there  was  at  the  time  sufficient  room  in  the  inn. 
As  the  duty  to  receive  the  guest  does  not  exist  unless  there  is 
room,  I  do  not  see  that  a  prima  facie  cause  of  action  is  alleged 
unless  the  declaration  contains  an  allegation  that  the  defendant 
had  room  for  the  plaintiff.  It  is  argued  that  the  facts  in  this 
respect  lie  peculiarly  within  the  knowledge  of  the  innkeeper,  and 
that  therefore  exhaustion  of  accommodation  should  be  regarded 
as  a  matter  of  defense.  This  argument  is  making  use  of  a  mere 
(occasional)  rule  of  evidence  to  overcome  a  rule  of  pleading. 
Prof.  Thayer  says  that  no  one  has  a  right  to  look  to  the  law  of 
evidence  to  determine  the  rules  of  pleading.  Thayer's  Prelim. 
Treatise  on  Evidence,  p.  371. 

This  ground  of  demurrer  must  be  held  good  as  to  this  count,  and 
also  as  to  all  the  remaining  counts  of  the  declaration.^ 


DE  WOLF  V.  FOED. 

193  N.  Y.  397.     1908.^ 

Werner,  J.  For  centuries  it  has  been  settled  in  all  jurisdic- 
tions  where  the   common   law  prevails  that  the  business   of   an 

2  "  I  think  a  person  who  comes  to  the  inn  has  no  legal  right  to  demand 
to  pass  the  night  in  a  public  sitting-room  if  the  bedrooms  are  all  full,  arid 
I  think  that  the  landlord  has  no  obligation  to  receive  him."  Brown,  v. 
Brand  [1902],  1  K.  B.  69G. 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


ADEQUATE   FACILITIES.  395 

innkeeper  is  of  a  quasi  public  character,  invested  with  many  privi- 
leges, and  burdened  with  correspondingly  great  responsibilities. 
Except  as  the  general  rule  of  the  common  law  is  modified  by 
statutory  enactment,  an  innkeeper  has  the  undoubted  right  to  con- 
duct his  inn  as  he  deems  best,  so  long  as  he  does  not  violate  the 
law.  Although  he  impliedly  invites  the  public  to  his  establish- 
ment, he  is  bound  to  furnish  no  particular  kind  of  entertainment 
or  accommodation,  except  such  as  may  be  expressly  stipulated  for, 
or  such  as  may  be  reasonably  implied  from  the  prices  which  he 
charges,  or  the  grade  of  the  inn  which  he  maintains.  And  while 
he  is  bound  to  accept  as  guests  all  proper  persons,  so  long  as  he 
has  room  for  them,  he  is  under  no  legal  obligation  to  assign  a 
guest  to  any  particular  apartment.  Fell  v.  Knight,  8  M.  &  W. 
269.  From  the  very  nature  of  the  business  it  is  inevitable  that  an 
innkeeper  must,  at  all  reasonable  times  and  for  all  proper  pur- 
poses, have  the  right  of  access  to  and  control  over  every  part  of  his 
inn,  even  though  separate  parts  thereof  may  be  occupied  by  guests 
for  hire.  Over  against  these  general  rights  and  privileges  there 
is  the  well-recognized  responsibility  of  the  innkeeper  for  the  guest's 
goods  and  chattels  brought  to  the  inn.  As  to  these  the  innkeeper 
is  an  insurer  unless  his  common-law  duty  is  modified  by  statute,  and 
he  is  liable  for  all  loss  except  such  as  is  occasioned  by  the  negligence 
or  fraud  of  the  guest,  or  by  the  act  of  God  or  the  public  enemy. 
Hulett  V.  Swift,  33  N.  Y.,  571,  88  Am.  Dec.  405.  Although  this 
liability  of  the  innkeeper  for  the  loss  of  goods  intrusted  to  him  by 
his  guest  was  clearly  defined  nearly  four  centuries  ago,  it  has  been 
reserved  for  us  at  this  late  day,  in  the  development  of  our  juris- 
prudence, to  define,  with  such  accuracy  as  the  nature  of  this 
case  requires,  the  relation  of  the  innkeeper  to  the  person  of  his 
guest.  It  is  clearly  not  the  conventional  relation  of  landlord  and 
tenant,  for  there  is  no  contract  as  to  the  realty.  Taylor's  L.  & 
T.  §  66.  A  room  in  an  inn  occupied  by  a  guest  is  not,  in  the 
legal  sense,  his  dwelling  house,  for  notwithstanding  his  occupancy, 
it  is  the  house  of  the  innkeeper.  Eogers  v.  People,  86  IST.  Y.  360, 
40  Am.  Eep.  548.  Xor  is  the  relation  of  innkeeper  and  guest 
usually  created  by  express  contract,  for  as  a  rule  it  is  based  wholly 
upon  the  mere  circumstance  that  one  man  happens  to  have  an  inn 
which  is  patronized  by  another,  and  the  law  implies  whatever  else 
is  necessary  to  constitute  the  relation  between  them.  Anthon's 
Law  Student,  p.  57;  Willard  vl  Reinhardt,  2  E.  D.  Smith,  148. 
It  is  a  relation,  moreover,  which  cannot  be  defined  with  exactitude 
in  matters  of  detail,  for  it  may  be  one  thing  in  a  mining  camp, 
or  in  the  remote  and  sparsely  settled  portions  of  a  country.  It  may 
be  another  thing  in  the  tavern  by  the  rural  wayside,  and  yet  another 


396  ADEQUATE   FACILITIES.  [CHAP.    VI. 

in  the  modern  urban  palace  called  a  hotel.  Between  the  extreme 
of  rugged  simplicity  on  the  one  hand  and  of  palatial  magnificence 
on  the  other,  there  are  numberless  gradations  of  service,  attention, 
convenience,  and  luxury  which  must  necessarily  give  the  relation 
of  innkeeper  and  guest  such  flexibility  as  will  render  it  adaptable  to 
varying  conditions  and  circumstances.  But  underneath  all  these 
differing  conditions  there  is,  of  course,  a  basic  legal  principle  which 
governs  the  general  relation  of  innkeeper  and  guest.  The  innkeeper 
holds  himself  out  as  able  and  willing  to  entertain  guests  for  hire ; 
and,  in  the  absence  of  a  specific  contract,  the  law  implies  that  he 
will  furnish  such  entertainment  as  the  character  of  his  inn  and 
reasonable  attention  to  the  convenience  and  comfort  of  his  guests 
will  afford. 


HEEVEY  V.  HART. 

149  Ala.  604.     1906.^ 

Haralson,  J.  In  Doyle  v.  Walker,  26  U.  C.  J.  B.  502,  it  was 
held,  as  the  common  law  on  the  subject,  that  the  innkeeper  has 
the  right  and  the  sole  right  to  select  the  apartment  for  a  guest,  and, 
if  he  finds  it  expedient,  to  change  the  apartment  and  assign  the 
guest  another,  without  becoming  a  trespasser  in  making  the  change. 
If,  having  the  necessary  convenience,  he  refuses  to  afford  reasonable 
accommodation,  he  is  liable  to  an  action  for  damages.  16  Am.  & 
Eng.  Ency.  Law   (2d  Ed.)   524,  525. 

The  plaintiff  in  this  case,  the  appellee  here,  sued  the  defendants, 
who  are  appellants,  to  recover  damages  for  the  alleged  reason  that 
he  was  put  out  of  the  room  to  which  he  had  been  assigned  by 
defendants  in  their  hotel,  and  was  refused  proper  accommodations 
in  said  hotel.  The  jury  found  for  defendants,  and  the  court,  on 
motion  of  the  plaintiff,  set  aside  the  verdict  and  granted  a  new 
trial.  The  grounds  of  the  motion  were:  "  1.  Because  the  verdict 
was  not  supported  by  the  evidence,  as  applied  to  the  law  as  charged 
by  the  court.  2.  Because  the  jury  in  rendition  of  the  verdict, 
ignored  the  law  as  charged  by  the  court.  3.  Because  the  verdict  is 
not  supported  by  the  evidence." 

The  well  established  rule  in  this  court,  as  to  granting  new  trials 
is,  "  that  this  court  will  not  revise  a  judgment  granting  the  motion, 
unless  the  evidence  plainly  and  palpably  supports  the  verdict." 
Merrill  v.  Brantley,  133  Ala.  537,  31  South.  847;  Smith  v.  Tombig- 
bee  E.  E.  Co.,  141  Ala.  332,  37  South.  389. 

1  The  statempnt  of  facts,  arguments  of  counsel  and  part  of  the  opinion 
are  omitted. —  Ed. 


ADEQUATE    FACILITIES.  397 

The  theory  of  the  plaintiff  relied  on  for  a  recovery  is  clearly  stated 
in  the  complaint,  upon  which,  issue  being  taken,  the  case  was  tried. 
The  plaintiff's  evidence  tended  to  support  the  complaint,  but  the 
evidence  of  the  defendants  was  not  entirely  consonant  therewith. 
In  some  of  its  more  important  phases,  it  conflicted,  and  different 
inferences  might  have  been  well  drawn  therefrom.  It  would  be 
useless  to  review  the  evidence  on  each  side,  to  do  which  would  require 
time  and  labor.  We  have  carefully  read  the  evidence  in  consulta- 
tion, and  conclude  that  while  it  might  justify,  yet  it  does  not 
''plainly  and  palpably  support  the  verdict,"  without  which  con- 
dition, we  cannot  consistently  with  the  rule  of  the  court  above 
announced  reverse  the  judgment  granting  the  motion  for  a  new 
trial. 

Under  the  averments  of  the  complaint,  the  defendant  was  not 
liable,  if  he  offered  plaintiff  proper  accommodations  in  lieu  of  the 
room  previously  assigned  to  him. 

The  ruling  on  the  motion  for  a  new  trial  must  be  affirmed.^ 

Affirmed. 

Tyson,  C.  J.,  and  Simpson  and  Dexsox,  JJ.,  concur. 


OCEAN  STEAMSHIP  CO.  OF  SAVANNAH  v.  SAVANNAH 
LOCOMOTIVE  WOEKS  AND  SUPPLY  CO. 

131  Ga.  831.     1909.^ 

EvAXS,  P.  J.  At  common  law  a  carrier's  duty  to  receive  goods 
was  limited  to  his  facilities  for  transportation.  The  owner  of  a 
single  ship  may  hold  himself  out  to  the  public  to  carry  certain 
goods  for  hire.  As  to  the  goods  he  proposes  to  carry,  he  is  a 
public  carrier ;  but  he  is  under  no  obligation  to  provide  other  ships 
because  his  vessel  is  inadequate  to  transport  all  goods  which  may 
be  offered  him.  Such  a  carrier  does  not  owe  to  the  public  all 
the  duties  imposed  by  the  law  on  railroad  companies  and  similar 
public  institutions  to  furnish  adequate  transportation  facilities 
for  all  goods  which  may  be  tendered.  Eailroad  companies  are 
public  institutions,  and  are  granted  certain  exclusive  franchises 
and  rights  which  naturally  impose  correlative  duties.  They  are 
invested  with  the  power  of  condemnation,  by  the  exercise  of  which 
sovereign  right  they  acquire  an  exclusive  privilege  to  carry  on  their 
business  over  the  highway  constructed  by  them.  They  are  en- 
dowed with  special  and  unusual  powers,  with  an  express  view  to  their 

2  Compare  Mann  Boudoir  Car  Co.  v.  Dupre  (1893),  54  Fed.  640.  and 
Pullman  Palace  Car  Co.  v.  Taylor   (1879),  65  Ind.  153. 

1  Only  an  extract  from  the  opinion  is  here  reprinted. —  Ed. 


398  ADEQUATE    FACILITIES.  [CHAP.    VI. 

rendering  to  the  public  adequate  service.  The  conference  of  these 
unusual  powers  raises  an  obligation,  not  only  to  serve  the  public 
impartially,  but  to  serve  the  public  efBciently.  Upon  them  the  law 
imposes  the  obligation  to  furnish  sufficient  facilities  for  the  reason- 
ably prompt  transportation  of  goods  tendered  for  carriage ;  and  they 
are  bound  to  provide  sufficient  cars  for  transporting,  without  un- 
reasonable delay,  the  usual  and  ordinary  quantity  of  freight  offered 
to  them,  or  which  might  reasonably  and  ordinarily  be  expected. 
5  Am.  &  Eng.  Enc.  L.  (2d  Ed.)  167.  A  navigation  company  like 
the  defendant,  which  receives  no  franchise  from  the  state  to  use 
the  open  sea,  and  which  enjoys  no  monopoly  or  right  of  eminent 
domain,  owes  no  duty  to  the  public  to  furnish  adequate  facilities 
to  transport  all  of  the  traffic  of  the  ports  of  its  termini.  It  is 
under  no  obligation  to  buy  other  ships  because  it  does  not  under- 
take  to  carry  any  more  goods  than  its  vessels  will  safely  accom- 
modate. If  there  is  a  demand  for  more  ships,  the  commercial  neces- 
sities will  regulate  the  deficiency  in  transportation  service,  either 
by  voluntary  enlargement  of  the  facilities  of  existing  ship  lines 
or  the  establishment  of  new  ones. 

A  carrier,  not  a  public  or  quasi  public  institution,  may  select  the 
class  of  goods  which  he  proposes  to  carry.  Whether  the  right  of 
selection  may  include  the  right  to  limit  the  quantity  of  any  com- 
modity he  proposes  to  carry,  provided  he  gives  notice  of  the 
limitation,  is  not  before  us. 


WHITEHOUSE  v.  STATEN  ISLAND  WATEE  CO. 
101  N.  Y.  App.  Div.  112.     1905.^ 

Hooker,  J.  The  principal  question  presented  by  the  record 
for  the  consideration  of  the  court  is  whether,  under  the  contract 
existing  between  the  parties  to  this  action,  the  defendant's  failure 
to  supply  water  to  the  plaintiff  during  a  considerable  portion  of 
the  month  of  January  and  part  of  the  month  of  February,  1904, 
was  a  breach  of  that  contract,  for  which  the  plaintiff  is  entitled 
to  recover  as  damages  the  fair  value  of  services  rendered  to  the 
plaintiff  in  pumping  water  from  his  cistern  for  his  use.  The  de- 
fendant is  a  quasi  public  corporation,  chartered  to  supply  water  to 
citizens  of  what  was  formerly  New  Brighton.  When  the  plain- 
tiff moved  into  his  present  residence,  connection  had  been  made 
between  that  residence  and  the  defendant's  main  in  St.  Mark's 
Place  by  means  of  a  service  pipe,  and,  upon  the  plaintiff's  taking  up 

1  Part  of  the  opinion  is  omitted. —  Ed. 


ADEQUATE    FACILITIES.  •       399 

his  residence  there,  he  paid  to  the  defendant  the  sum  of  money  it 
asked  each  year  for  the  supply  of  water  which  he  proposed  to  use. 
The  rate  was  readjusted  after  he  had  lived  there  a  short  time,  for 
the  reason  that  he  thought  he  was  paying  a  larger  rate  than  the 
regulations  of  the  defendant  called  for.  One  of  the  defendant's 
agents,  upon  the  basis  of  the  established  rates,  took  an  inventory 
of  what  the  plaintiff  was  using,  and  readjusted  the  rate.  This  rate 
was  paid  for  many  years,  and  on  or  about  the  1st  day  of  May, 
1903,  the  plaintiff  again  paid  to  the  defendant,  and  the  latter 
received,  the  annual  rental.  Under  these  circumstances,  a  contract 
is  implied  between  the  plaintiff  and  the  defendant  corporation,  by 
virtue  of  which  it  undertakes  to  supply  him  with  water.  McEntee 
V.  Kingston  Water  Co.,  165  X.  Y.  27,  58  N.  E.  785.  There  must 
necessarily  be  implied  in  this  contract  a  provision  that  the  supply 
by  the  defendant  for  which  the  plaintiff  is  paying  shall  be  sufficient 
for  the  ordinary  uses  to  which  the  plaintiff  has  put  it.  It  is  un- 
questioned that  there  has  been  a  breach  of  that  contract,  and  the 
measure  of  damages  adopted  by  the  plaintiff  is  not,  nor  could  it 
well  be,  questioned.  The  defendant  sought  to  escape  liability  on 
the  theory  that  the  contract  with  the  plaintiff  was  simply  to  supply 
water  at  the  junction  of  the  service  pipe  and  the  water  main  in  St. 
Mark's  Place,  and  that  because  the  plaintiff's  residence  was  on  an 
eminence,  and  at  an  altitude  considerably  above  other  premises 
supplied  from  the  St.  Mark's  main,  it  was  not  liable,  provided  it 
could  show  that  water  could  have  been  obtained  from  the  junction 
of  the  main  and  the  service  pipe.  Such  was  not  the  contract  be- 
tween the  parties.  Were  such  provision  properly  to  be  incorporated 
into  an  implied  contract  between  water  companies  and  consumers, 
it  would,  at  the  option  of  the  water  company,  relieve  it  from  all 
liability  for  its  failure  to  force  water  into  the  houses  of  its  con- 
sumers, by  showing  that  water  could  have  been  obtained  in  the 
street  below  ground  in  the  water  mains.  The  implied  contract  in 
this  case  was  to  supply  the  plaintiff  with  water,  no  matter  what 
the  altitude  of  his  house  was  above  the  water  main,  for  this  had 
been  the  custom  for  many  years,  and  the  defendant  had  been  paid 
the  rates  demanded  for  supplying  water  at  the  house;  and  again, 
in  continuance  of  the  contract,  on  the  1st  day  of  May,  1903,  the 
defendant  accepted  payment  of  the  full  rate  for  the  ensuing 
year,  which  implied  a  contract  to  continue  the  service  as  it  had 
been  rendered,  and  that  was  that  the  plaintiff  should  have  water  in 
his  house.^ 

2  See  City  of  Jackson  v.  Anderson   (1910),  97  Miss,  1. 


400  ADEQUATE   FACILITIES.  [CHAP.   VI. 


LEAVELL  V.  WESTERN  UNION  TELEGRAPH  CO. 

116  N.  C.  211.     1^95} 

This  was  a  complaint,  heard  before  the  Railroad  Commission, 
in  Raleigh,  on  the  13th  November,  1894. 

The  complaint  was  filed  August  21,  1894,  alleging  a  violation 
of  the  tariff  rate  prescribed  by  the  Commission  for  the  transmis- 
sion of  telegraphic  messages. 

The  plaintiff  alleged  that  on  August  17,  1894,  he  delivered  a  ten- 
word  message  to  the  defendant,  at  Wilson,  N.  C,  to  be  transmitted 
to  Edenton,  N.  C,  and  was  required  by  the  defendant  to  pay  fifty 
cents  for  the  transmission  of  the  message,  and  that  this  was  a 
violation  of  the  rate  prescribed  by  the  Railroad  Commission  of 
North  Carolina. 

The  defendant  answered  the  complaint  on  the  31st  of  August, 
1894,  through  its  General  Superintendent,  J.  B.  Tree,  alleging  that 
the  "telegraphic  tolls  from  Wilson,  N.  C,  to  Norfolk,  Va.,  are 
twenty-five  cents  for  ten  words,  and  the  rate  from  Norfolk,  Va., 
to  Edenton,  N.  C,  is  twenty-five  cents,  making  a  total  of  fifty  cents. 
The  message  was  sent  via  Norfolk  because  it  is  the  only  telegraph 
route  by  which  the  business  addressed  to  Edenton  can  be  handled 
and  turned  over  to  the  Elizabeth  City  and  Norfolk  Telegraph  Com- 
pany, at  Norfolk,  Va.,  as  the  Western  Union  Telegraph  Company 
has  no  commercial  office  at  Edenton,  N.  C." 

Clark,  J.  In  Express  Co.  v.  Railroad,  111  N.  C,  463,  this 
Court  affirmed  the  constitutionality  of  the  act  (Ch.  320,  Acts 
1891)  establishing  the  Railroad  and  Telegraph  Commission.  In 
Mayo  V.  Telegraph  Co.,  112  N.  C,  343,  it  sustained  the  power  of 
such  Commission  under  Section  26  of  said  act,  to  establish  rates 
for  telegraph  companies.  In  Railroad  Commission  v.  Telegraph 
Co.  (Albea's  case),  113  N.  C,  213,  the  Court  held  that  tele- 
graphic messages  transmitted  by  a  company  from  and  to  points 
in  this  State,  although  traversing  another  State  in  the  route,  do  not 
constitute  interstate  commerce  and  are  subject  to  the  tariff  regulation 
of  the  commission.  In  this  it  followed  the  unanimous  opinion  of 
the  Supreme  Court  of  the  United  States,  delivered  by  Fuller, 
C.  J.,  in  Railroad  v.  Pennsylvania,  145  U.  S.,  192.  To  the  same 
purport,  Campbell  v.  Railroad,  86  Iowa,  587. 

In  the  present  case  the  commission  find  as  a  fact  that  "  the  de- 
fendant has  a  continuous  line  by  which  messages  may  be  transmitted 
from  Wilson  to  Edenton  and  other  adjacent  points  in  North  Caro- 

1  Part  of  the  statement  of  facts  and  part  of  the  opinion  are  omitted. —  Ed. 


ADEQUATE    FACILITIES.  401 

lina,  but  this  line  traverses  a  part  of  the  state  of  Virginia,  passing 
through  the  city  of  Norfolk;"  and  it  properly  holds  upon  the  evi- 
dence "  that  the  telegraph  office  at  Edenton  is  under  the  control  of 
the  defendant,  and  the  operator,  though  employed  by  the  railroad 
company,  is  the  agent  and  operator  of  the  defendant."  It  neces- 
sarily follows  from  this  state  of  facts  that  as  the  defendant  could 
have  sent  the  message  the  whole  distance  over  its  own  line,  it  can- 
not be  heard  to  say  that  it  did  not  do  what  it  ought  to  have  done 
and  thus  collect  50  cents  for  the  message  instead  of  25  as  allowed 
by  the  commission  tariff.  The  defence  set  up  that  in  fact  it  only 
carried  the  message  to  Norfolk  and  then  paid  another  company 
to  forward  it  to  Edenton  can  not  be  regarded  when  it  might  itself 
have  completed  the  delivery  of  the  message.  The  defendant  seeks 
to  excuse  itself  on  the  plea  that  it  has  only  one  wire  to  Edenton 
and  that  this  is  fully  occupied  at  that  office  by  the  work  it  does  for 
the  railroad  company.  ,But  it  is  the  duty  of  the  telegraph  com- 
pany to  have  sufficient  facilities  to  transact  all  the  business  offered 
to  it  for  all  points  at  which  it  has  offices.  If  the  press  of  business 
offered  is  so  great  that  one  wire  or  one  operator  at  a  point  is  not 
sufficient  it  is  the  duty  of  the  company  to  add  another  wire  or 
an  additional  employee.)  It  is  not  a  mere  private  business  but  a 
public  duty  which  the  defendants  by  their  franchise  are  authorized 
to  discharge.  It  is  further  to  be  noted  that  in  giving  to  the  rail- 
road company  the  preference  in  the  use  of  their  line  to  Edenton, 
while  at  other  points,  as  Moyock,  Centreville  and  Hertford  on  the 
same  line,  the  public  is  admitted  to  the  use  of  the  wire,  the  defend- 
ant is  making  a  forbidden  and  illegal  discrimination  in  favor  of 
one  customer  and  against  the  public  at  large,  as  was  intimated  in 
Albea's  case,  suiyra,  113  N.  C,  on  page  226. 

It  is  only  by  virtue  of  its  franchise  as  a  telegraph  company  that 
it  can  operate  its  line  to  Edenton  at  all.  It  cannot  discriminate 
at  that  point  in  favor  of  or  against  any  customer.  It  cannot  sub- 
stract  itself  from  obedience  to  the  rates  prescribed  by  the  authority 
of  the  State,  acting  through  the  Commission,  by  a  contract  giving 
one  customer,  the  railroad,  preference  in  business  and  pleading  that 
such  business  occupies  the  only  wire  it  has.  The  discrimination  is 
itself  illegal.  Besides,  if  it  were  not,  the  small  cost  of  an  additional 
wire,  which  it  is  common  knowledge  does  not  exceed  ten  dollars 
per  mile,  furnishes  no  ground  to  exempt  the  defendant  from  fur- 
nishing the  additional  facility  to  do  the  business  for  all.  The 
charge  of  a  double  rate  between  Edenton  and  other  points  in 
North  Carolina  is  a  far  heavier  imposition  upon  the  public  than 
the  cost  of  the  additional  wire  to  defendant,  and  is  just  the  kind 
of  burden  and  discrimination  which  the  Commission  was  established 


403  '  ADEQUATE   FACILITIES.  [CHAP,   VI. 

to  prevent.  In  Albea's  case,  supra,  no  commercial  message  was 
tendered,  and  the  point  now  decided  was  not  presented  by  the 
record.     The  ruling  of  the  Commission  is  in  all  respects. 

Af[irmed.^ 


LAWEENCE  v.  EICHAEDS. 

Ill  Me.  95.     1913.^ 

.  Savage,  C.  J.  This  is  a  mandamus  proceeding  brought  against 
the  defendants  as  trustees  of  the  Gardiner  Water  District,  wherein 
it  is  sought  to  compel  the  defendants  to  extend  the  water  mains 
of  the  District  to  the  petitioner's  residence  in  South  Gardiner,  and 
supply  him  with  water.  The  cause  was  brought  before  a  single 
Justice  who  denied  the  peremptory  writ,  and  it  comes  before  us  on 
exceptions  to  that  ruling. 

The  Gardiner  Water  District  is  a  quasi-municipal  corporation, 
created  by  chapter  82  of  the  Private  and  Special  Laws  of  1903. 
It  is  about  six  miles  long  northerly  and  southerly  and  about  one 
and  five-eighths  wide  on  the  average.  Territorially  it  includes  only 
a  part  of  the  city  of  Gardiner,  but  it  does  include  the  village  of 
South  Gardiner,  in  which  the  petitioner's  house  is  situated.  The 
primary  object  of  the  charter  was  to  enable  the  District  to  acquire 
the  ownership  of  the  existing  water  system  of  the  Maine  Water 
Company  in  Gardiner,  Pittston,  Eandolph  and  Farmingdale,  by 
condemnation  or  otherwise.  For,  although  power  was  granted  to  it 
to  take  and  hold  water  of  the  Cobbosseecontee  river,  and  to  take 
land  for  dams,  reservoirs  and  so  forth,  yet  section  13  of  the  Act 
provided  that  this  grant  of  power  should  be  inoperative  unless 
the  District  should  first  acquire  the  plant  and  franchises  of  the 
Maine  Water  Company.  At  the  time  the  charter  was  granted, 
and  at  the  time  the  District  acquired  the  plant  of  the  Maine 
Water  Company,  its  system  was  extended  only  through  the  more 
congested  and  thickly  settled  portions  of  the  city  of  Gardiner,  and 
not  into  the  outlying  parts  of  the  District.  The  area  of  service  lay 
mostly  within  a  circle  one  mile  in  diameter.  It  did  not  then  extend 
to  South  Gardiner,  which  is  about  five  miles  from  the  city  proper. 
Nor  has  it  since  been  extended  in  the  direction  of  South  Gardiner 
more  than  a  few  hundred  feet. 

It  is  well  settled  that  mandamus  does  not  lie  to  compel  the  per- 
formance of  acts  necessarily  involving  the  exercise  of  Judgment  and 
discretion  on  the  part  of  the  officer,  board  or  commission  at  whose 

2  See  Cumberland  T.  &  T.  Co.  v.  Kelly   (1908),  160  Fed.  316. 
1  Only  part  of  the  opinion  is  reprinted. —  Ed. 


ADEQUATE   FACILITIES.  403 

hands  performance  is  desired.  Tlie  court  may  under  proper  cir- 
cumstances require  an  inferior  tribunal  to  exercise  its  discretion,  but 
not  prescribe  how  it  shall  exercise  it.  The  domain  of  discretionary 
powers  conferred  upon  municipal  bodies  will  in  no  case  be  invaded 
by  the  court.  The  court  cannot  substitute  its  own  judgment  for 
that  of  the  tribunal  to  wliich  it  was  committed  by  law.  Bangor  v. 
County  Commissioners,  87  Maine,  294 ;  Spelling  on  Extraordinary 
Eemedies,  sections  G87,  1384.  This  principle  is  admitted  in  argu- 
ment by  the  petitioner. 

But  the  petitioner  contends  that  the  trustees  have  no  discre- 
tion in  the  matter,  and  that,  by  force  of  the  original  act  of  1903, 
he  has  a  clear,  legal  and  vested  right,  even  a  contract  right,  to 
have  water  supplied  at  his  house, —  a  right  which  the  Legislature 
could  not  impair  by  the  amendment  of  1905.     He  bases  his  con- 
tention on  the  ground  that  the  District  is  bound  to  supply  every 
inhabitant  of  the  District  with  water.     If  this  contention  has  real 
merit,  the  consequence  is  that  the  trustees,  acting  for  the  District, 
are  legally  bound  to  supply  water  to  all  inhabitants,  no  matter  how 
large  the  cost  of  the  undertaking,  nor  how  small  the  revenue,  and 
no  matter  how  ruinous  and  destructive  the  result  might  be  to  the 
financial  ability  of  the  District  to  carry  on  its  operations.     That 
this  contention  is  not  sound  is,  we  think,  easily  demonstrable. 
The  area  of  the  District  outside  of  the  city  proper  and   South 
Gardiner  is  scatteringly  settled.     The  elevation  in  some  places  is 
considerably  higher  than  the  system's  reservoir.     It  does  not  need 
the  testimony  of  expert  engineer*  to  satisfy  a  reasoning  mind  that 
under  such  conditions  the  expense  necessarily  to  be  incurred  in  per- 
forming the  duty,  as  it  is  claimed  to  be,  of  supplying  every  in- 
habitant of  the  District  with  water  would  practically  be  destructive 
of  the  purpose  of  the  charter.     It  would  create  a  burden  too  heavy 
to  be  borne.     Did  the  Legislature  contemplate  and  intend  such  a 
possible  result?     Did  the  Legislature  intend,  when  it  empowered 
the  cities  of  Lewiston  and  Bangor  to  own  their  water  systems,  with 
powers  and  duties  with  respect  to  the  w^ater  supply  similar  to  those 
of  the  Gardiner  Water  District,  that  those  cities  were  bound  to 
furnish  water  over  the  entire  extent  of  their  territorial  areas  ?     We 
do  not  think  so.     It  is  a  matter  of  common  knowledge  that  water 
systems  in  towns  or  cities  containing  both  an  urban  and  a  rural 
population,  whether  the  systems  be  owned  privately  or  municipally, 
never  have  been  in  fact,  and  are  not  now,  anywhere,  extended  beyond 
the  more  compact  parts  of  the  town  into  and  through  the  rural 
parts.     It  is  practicable  in  the  rural  parts  for  inhabitants  to  sup- 
ply themselves.     In  the  thickly  settled  parts  it  gradually  becomes 
inconvenient,  impracticable  and  sometimes  impossible  for  the  in- 


404  ADEQUATE    FACILITIES.  [CHAP.    VI. 

habitants  to  do  so.  Sources  of  supply  become  exhausted  or  defiled, 
and  the  need  for  more  water,  which  the  inhabitant  cannot  well 
furnish  for  himself,  becomes  imperative.  Organized  action,  either 
public  or  private,  becomes  necessary,  and  the  individual  then  pays 
for  a  service  which  he  can  no  longer  perform  for  himself. 

We  think  then  there  was  nothing  in  the  situation  existing  in 
Gardiner  which  gives  color  to  the  contention  that  the  Legislature 
intended  the  district  to  be  bound  to  supply  all  the  inhabitants  within 
its  limits  with  water,  or  to  operate  and  extend  the  system  beyond 
the  ordinary  limits  to  which  similar  systems  are  operated  and  ex- 
tended. The  system  which  the  district  was  authorized  to  acquire 
was  limited  in  Gardiner  in  fact  to  the  urban  portion  of  the  city. 
This  system  the  trustees  were  empowered  to  extend  and  improve, 
but  we  do  not  think  that  the  statute  thereby  required  them  to  ex- 
tend to  all  parts  of  the  district,  to  the  parts  which  did  not  need 
the  water  as  well  as  to  those  which  did;  even,  if  the  petitioner's 
theory  is  correct,  to  extend  to  the  individual  who  might  reside  in 
the  remotest  rural  portion  of  the  town,  if  he  demanded  it.  To 
place  such  a  construction  upon  the  statute,  which  alone  imposed 
duties  upon  the  trustees,  seems  unreasonable,  and  there  is  nothing 
in  the  language  of  the  statute  which  requires  such  a  construction. 
In  fact  there  is  an  implication  otherwise  in  the  statute.  By  sec- 
tion 10  it  was  provided  that  the  water  rates  established  by  the 
trustees  should  be  such  as  to  provide  revenue  "...  for  such  ex- 
tensions and  renewals  as  may  become  necessary."  This  clearly 
does  not  mean  extensions  all  over  the  district. 

We  think  then  that  the  contention  that  as  a  matter  of  law 
every  individual  in  the  district  has  the  right  to  have  the  water 
brought  to  him  cannot  be  sustained.  But  if  the  district  is  not 
in  law  bound  to  supply  all,  who  is  to  determine  to  what  extent  the 
system  shall  be  extended,  and  who  shall  thereby  be  supplied  ?  The 
power  to  do  this  must  necessarily  be  vested  in  the  trustees.,  It  is 
not  given  to  any  other  person  or  body.  In  making  the  deter- 
mination they  must  use  their  judgment  and  exercise  their  discre- 
tion, and  the  exercise  of  that  discretion  is  not  reviewable  on  man- 
damus. 

It  is  true  that  the  situation  of  the  petitioner  in  the  village  of 
South  Gardiner  may  not  be  the  same  as  that  of  the  farmer  in  the 
rural  part  of  the  town  with  his  spring,  or  well,  or  brook.  But 
once  grant,  as  we  must,  that  the  trustees  are  vested  with  a  dis- 
cretion not  to  extend  to  every  part  of  the  district,  it  follows  that 
some  power  must  decide  the  limits  of  extension.  There  is  no  di- 
viding line  in  the  exercise  of  the  discretion.  There  is  no  ground 
for  saying  that  the  trustees  have  discretion  as  to  part  of  the  dis- 


ADEQUATE    FACILITIES.  405 

trict,  and  have  none  as  to  another  part.  They  must  have  dis- 
cretion as  to  all  extensions  or  none.  If  they  abuse  their  discretion, 
the  remedy  does  not  lie  in  the  power  of  the  court,  but  in  the  wis- 
dom of  the  Legislature. 

/  It  follows  from  what  we  have  said  that  the  petitioner  has  no 
vested  legal  right,  whether  it  be  in  the  nature  of  contract  or  other- 
wise, to  have  the  district's  water  main  extended  to  his  house.  His 
only  legal  right  is  that  the  trustees  shall  exercise  their  discretion. 
That  they  have  done,  adversely  to  the  petitioner,  j 

It  is  proper  to  say  that  the  case  of  Bobbins  v.  Railway  Co.,  100 
Me.  496,  62  Atl.  136,  1  L.  E.  A.  (N.  S.)  963,  on  which  the  peti- 
tioner strongly  relies,  is  easily  distinguishable  from  this  case. 
There  the  main  was  already  extended  by  the  petitioner's  house,  and 
mandamus  was  granted  to  compel  the  defendant  to  permit  water  to 
be  conducted  from  the  main  to  the  house.  There  was  no  question 
of  extending  a  main,  nor  was  the  defendant  in  that  case  vested 
with  any  such  discretion  as  we  think  these  defendants  are.  The 
court  in  that  case  held  that  a  public  service  corporation  was  bound 
to  serve  all  impartially,  fairly,  and  without  discrimination,  but  it 
did  not  hold  that  such  a  corporation  authorized  to  supply 
water  to  the  public  was  bound  at  all  hazards,  without  regard  to 
expense  or  revenue,  or  the  exercise  of  good  business  judgment, 
to  extend  its  mains  to  every  individual  of  the  public  who  might 
demand  it.  But  what  the  duties  of  a  public  service  corporation 
may  be  in  a  particular  case  are  not  involved  in  this  case,  and  we 
do  not  need  to  consider  them  now. 

fit  is  unnecessary  to  consider  the  other  questions  raised.  Our 
conclusion  is  that  the  Gardiner  Water  District  is  a  municipal  cor- 
poration created  for  a  special  purpose,  that  its  trustees  are  vested 
with  discretionary  powers  in  the  matter  of  extensions  of  the  system, 
and  tl\at  the  court  cannot  interfere  with  the  exercise  of  their  dis- 
cretion. 

Exceptions  overruled. 


CENTEAL  UNION  TELEPHONE  CO.  v.   STATE. 

118  Ind.   194.     1888.^ 

Olds,  J.     This  is  an  action,  brought  by  the  relatrix,  to  compel  \ 
the  appellant,  by  mandate,  to  furnish  her,  at  her  place  of  business     ■ 
in  the  city  of  Lafayette,  a  telephone  and  telephonic  connections 
and  facilities. 

1  Part  of  the  opinion  is  omitted. —  Ed, 


406  ADEQUATE    FACILITIES.  [CHAP.    VI. 

This  action  is  brought  under  the  acts  of  1885,  prescribing  the 
duties  of  telephone  companies,  and  to  regulate  the  rental  to  be  paid 
for  the  use  of  telephones,  and  requires  a  construction  of  these  acts. 
On  April  8th,  1885,  the  following  law  was  enacted : 

"  An  Act  prescribing  certain  duties  of  telegraph  and  telephone 
companies,  prohibiting  discrimination  between  patrons,  pro- 
viding penalties  therefor,  and  declaring  an  emergency." 

Section  1.  Eelates  exclusively  to  telegraph  companies. 

"  Sec.  2.  Every  telephone  company,  with  wires  wholly  or  partly 
within  this  State,  and  engaged  in  a  general  telephone  business, 
shall  within  the  local  limits  of  such  telephone  company's  busi- 
ness, supply  all  applicants  for  telephone  connections  and  facilities 
with  such  connections  and  facilities  without  discrimination  or  par- 
tiality, provided  such  applicants  comply  or  offer  to  comply  with  the 
reasonable  regulations  of  the  company ;  and  no  such  company  shall 
impose  any  conditions  or  restrictions  upon  any  such  applicant  that 
are  not  imposed  impartially  upon  all  persons  or  companies  in  like 
situation,  nor  shall  such  companies  discriminate  against  any  indi- 
vidual or  company  engaged  in  any  lawful  business,  or  between  indi- 
viduals or  companies  engaged  in  the  same  business,  by  requiring  as 
a  condition  for  furnishing  such  facilities  that  they  shall  not  be  used 
in  the  business  of  the  applicant,  or  otherwise  for  any  lawful  pur- 
pose." 

On  the  13th  of  April,  1885,  another  law  was  enacted,  which  is  as 
follows : 

"  An  Act  to  regulate  the  rental  allowed  for  the  use  of  telephones, 
and  fixing  a  penalty  for  its  violation." 

It  is  insisted  by  appellant  that  the  act  of  April  8th  is  simply 
an  act  prohibiting  discriminations  by  telephone  companies,  and  pro- 
viding a  penalty  for  any  discrimination  by  such  companies,  and 
that  the  act  of  April  13th  prescribes  the  price  which  may  be  charged 
for  the  rental  of  telephones,  when  the  same  are  rented,  and  pre- 
scribes penalties  for  asking  or  taking  a  greater  rental,  and  that 
unless  they  inhibit  all  other  systems  or  methods  of  telephony,  other 
than  the  rental,  this  case  was  decided  wrongly  by  the  court  below; 
and  that  the  title  to  the  act  of  April  8th  declares  it  to  be  an  act  pro- 
hibiting discrimination  between  patrons,  and  prescribing  penalties 
therefor. 

It  is  further  claimed  by  appellant  that  the  answers  show  that 
appellant  was  not  engaged  in  a  general  telephone  business  at  La- 
fayette at  the  time  of  appellee's  demand,  but  was  engaged  only  in 
a  limited  business,  and  that  it  offered  to  furnish  appellees  such 


ADEQUATE   FACILITIES.  407 

limited  service,  and  has  in  all  respects  offered  to  treat  her  in  the 
same  manner  as  it  was  treating  its  other  patrons,  but  that  she 
wanted  a  different  service  than  that  in  which  appellant  was  en- 
gaged ;  in  other  words,  she  wanted  appellant  to  discriminate  in  her 
favor,  and  to  grant  her  demand  would  make  appellant  amenable  to 
the  law  against  discrimination./ 

In  determining  this  case  it  is  important  to  consider  the  nature 
of  the  telephone,  how  operated,  the  utility  of  it,  and  the  rights  of 
the  parties  in  the  absence  of  the  statutes  enacted  by  the  Legislature. 
The  telephone  differs  from  the  telegraph  very  materially,  in  this, 
that  the  transmission  of  news,  the  sending  and  receiving  of  mes- 
sages by  telegraph,  can  only  be  done  by  those  having  a  knowledge  of 
the  business,  and  having  a  knowledge  of  the  art  and  science  of  teleg- 
raphy. To  others,  who  are  not  telegraphists,  the  telegraph  would 
be  useless.  It  is,  therefore,  only  beneficial  to  the  general  public 
when  operated  by  persons  or  companies  keeping  in  their  em- 
ploy telegraphists,  to  send,  receive  and  transmit  messages,  and  mes- 
sengers to  deliver  them  to  persons  to  whom  addressed.  A  tele- 
graphic instrument  in  the  house  or  place  of  business  of  a  patron 
of  the  company,  connected  with  the  wires  of  the  company,  with 
facilities  for  transmitting  and  receiving  messages  by  telegraph, 
would  be  of  no  use  to  a  patron,  unless  he  was  learned  in  the  art 
of  telegraphy.  But  the  telephone  is  entirely  different ;  a  telephone, 
with  proper  connections  and  facilities  for  use,  can  be  used  by  any 
person;  it  requires  no  experience  to  operate  it.  Webster  defines 
it  as  "  An  instrument  for  conveying  sound  to  a  great  distance." 

To  conduct  the  business  of  the  telephone  by  public  telephone  sta- 
tions and  by  sending  messengers  to  notify  persons  with  whom  a 
patron  of  the  company  desires  to  converse  in  other  parts  of  the  city, 
to  compel  the  person  desiring  to  converse  with  others  to  remain  at 
the  public  telephone  station  until  the  persons  with  whom  they  de- 
sire to  converse  can  be  notified  and  so  arrange  their  business  as  to 
leave  and  go  to  another  telephone  station  and  hold  the  conversa- 
tion, renders  the  use  of  the  telephone  almost  worthless.  It  is  by 
reason  of  the  fact  that  business  men  can  have  them  in  their  offices 
and  residences,  and,  without  leaving  their  homes  or  their  places 
of  business,  call  up  another  at  a  great  distance  with  whom  they 
have  important  business,  and  converse  without  the  loss  of  valuable 
time  on  the  part  of  either,  that  the  telephone  is  particularly  valu- 
able as  an  instrument  of  commerce.  It  being  an  instrument  of 
commerce,  and  persons  or  corporations  engaged  in  the  general  tele- 
phone business  being  common  carriers  of  news,  what  are  the  rights 
of  the  public,  independent  of  the  statute,  as  regards  discrimina- 
tion ? 


408  ADEQUATE   FACILITIES.  [CHAP.    VI. 

Any  person  or  corporation  engaged  in  telephone  business,  opera- 
ting telephone  lines,  furnishing  telephonic  connections,  facilities 
and  service  to  business  houses,  persons  and  companies,  and  dis- 
criminating against  any  person  or  company,  can  be  compelled  by 
mandate,  on  the  petition  of  such  person  or  company  discriminated 
against,  to  furnish  to  the  petitioner  a  like  service  as  furnished  to 
others.  This  has  been  held  in  the  cases  of  State  v.  Nebraska  Tele- 
phone Co.,  17  Neb.  136;  Vincent  v.  Chicago,  etc.,  R.  R.  Co.,  49  111. 
33;  People  v.  Manhattan  Gas  Light  Co.,  45  Barb.  136.  And  the 
principle  held  in  these  cases  is  in  accordance  with  the  well  settled 
rules  governing  common  carriers. 

It  is  not  controverted  in  the  argument  by  counsel  for  the  ap- 
pellant that  the  Legislature  had  the  right  to  regulate  the  price  to  be 
charged  and  collected  for  the  use  of  telephones  and  telephonic 
connections,  facilities  and  service ;  and  even  if  it  were  controverted, 
it  is  well  settled  by  authorities  that  the  Legislature  has  the  right 
to  do  so,  relative  to  the  business  conducted  within  the  State.  Hoc- 
kett  V.  State,  105  Ind.  250,  and  Central  U.  Tel.  Co.  v.  Bradbury, 
supra,  and  authorities  cited  in  those  cases;  Johnson  v.  State,  113 
Ind.  143;  Munn  v.  Illinois,  94  U.  S.  113;  Ouachita  Packet  Co.  v. 
Aiken,  121  U.  S.  144;  Patterson  v.  Kentucky,  97  U.  S.  501. 

The  telephone  company  being  liable  for  discriminating  between 
persons  and  companies,  and  the  person  or  company  discriminated 
against  having  a  remedy  without  the  enactment  of  section  2  of 
the  act  of  April  8th,  1885,  there  was  no  occasion  for  the  statute  on 
that  account  alone.  Then  what  was  the  purpose  and  object  of  the 
two  statutes  set  out  ? 

It  should  be  presumed  the  Legislature  had  some  purpose  and  ob- 
ject. If  section  2  of  the  act  of  April  8th  was  only  to  prevent  dis- 
crimination, and  section  1  of  the  act  of  April  13th  only  to  fix  the 
price  for  the  rental  of  telephones  when  the  telephone  company  was 
operating  under  a  rental  system,  then  all  that  the  companies  opera- 
ting telephone  lines  would  have  to  do  would  be  to  cease  to  operate 
their  business  under  a  rental  system,  and  charge  so  much  for  each 
conversation;  or,  as  they  have  done  in  this  case,  establish  public 
telephone  stations,  and  then  charge  for  each  separate  use  of  the  tele- 
phone, and  they  might  thereby  derive  a  greater  income  for  the  use 
of  the  telephone,  and  render  to  the  public  much  inferior  service, 
and  yet  avoid  liability  under  the  statute.  We  do  not  think  such 
was  the  object  or  purpose  of  the  statute,  or  that  such  construction 
can  be  placed  upon  it. 

It  was  the  evident  intention  of  the  Legislature  that  where  a 
telephone  company  was  doing  a  general  telephone  business  in  this 
State,  any  person  within  the  local  limits  of  its  business  in  a  town 


ADEQUATE   FACILITIES.  409 

or  city  should  have  the  right  to  demand  and  receive  a  telephone 
and  telephonic  connections,  facilities  and  service,  the  best  in  use 
by  such  company,  and  should  only  be  liable  to  be  charged  and  to 
pay  three  dollars  per  month  therefor.  With  this  construction  only 
are  the  statutes  of  any  benefit  to  the  citizens  of  the  State.  The 
Legislature  fixed  what,  in  the  judgment  of  that  body,  was  the 
maximum  price  that  should  be  charged  for  the  service,  and  placed 
it  in  the  power  of  each  individual,  and  gave  him  the  right,  to  de- 
mand and  receive  such  service  within  tlie  limits  of  the  company's 
business,  in  any  town  or  city  where  such  company  is  doing  a  general 
telephone  business. 


GALENA  AND  CHICAGO  UNION  EAILEOAD  CO.  v.  EAE. 

18   111.  488.     1857.^ 

Skinner,  J.  This  was  an  action  on  the  case  against  the  rail- 
road company,  as  common  carriers,  for  refusal  to  carry,  and  for 
delay  in  carrying,  the  grain  of  the  plaintiff  below  from  Eockford 
to  Chicago.  The  cause  was  tried  by  jury,  who  returned  a  verdict 
of  $4,950  against  the  company,  upon  which  the  court  rendered  judg- 
ment, refusing  to  grant  a  new  trial. 

The  evidence  is  very  voluminous,  and,  in  the  opinion  of  the 
court,  is  insufficient  to  sustain  a  verdict  for  the  amount  found. 

The  instructions  in  the  record,  and  involved  in  the  assignments 
of  error,  are  seventeen  in  number,  and  a  critical  examination  of 
each  in  our  opinion  would  embrace  almost  the  entire  law  relating 
to  common  carriers.  This  court  is  under  no  obligation  to  write  a 
treatise  upon  this  branch  of  the  law,  nor  was  the  court  below  bound 
to  act  upon  instructions  not  necessary  to  enlighten  the  jury  of  the 
law  arising  upon  tlie  evidence  properly  before  them. 

As  the  cause  will  be  again  for  trial,  we  will  state  those  rules 
of  law  in  controversy  which  are  material  to  the  case  made  by  the 
record. 

The  evidence  shows  that  the  company  had  the  necessary  means 
and  facilities  for  transporting  with  dispatch  the  amount  of  freight 
ordinarily  for  carriage,  and  that  at  the  period  when  the  wrong  is 
charged  to  have  been  committed  there  was  an  unusual  and  extraor- 
dinary quantity  of  grain  for  shipment,  owing  to  the  great  harvest 
of  that  year  and  want  of  facilities  for  storage  in  the  country.  In 
this  respect  the  company  was  not  in  default,  in  regard  to  that  duty 
it  owed  the  public,  of  affording  reasonable  facilities  for  the  trans- 

1  Part  of  the  opinion  is  omitted. —  Ed. 


410  ADEQUATE    FACILITIES.  [CHAP,   VL 

portation  of  freight.  Neither  the  common  law  nor  the  statute  re- 
quires anything  more  than  that  the  company  shall  furnish  reason- 
able and  ordinary  facilities  of  transportation  —  such  as  are  adapted 
to  its  mode  of  conveyance,  and  will  meet  the  ordinary  demands  of 
the  public.  The  company  was  not  bound  to  provide  in  advance  for 
or  anticipate  extraordinary  occasions,  or  an  unusual  influx  of 
freight  to  the  road.  Wibert  v.  New  York  &  Erie  Railroad  Com- 
pany, 19  Barbour's  S.  E.  36 ;  Statutes  1856,  p.  1070. 

Corporations  for  carrying  are  created  for  the  public  good, 
and  powers  and  pri\aleges  are  given  them  in  consideration 
of  the  benefits  they  are  expected  to  confer  upon  the  public.  Their 
obligations  to  the  public  require  the  use  of  their  facilities  fairly, 
and  in  such  manner  as  is  best  calculated,  in  the  prosecution  of  their 
business,  to  afford  the  largest  public  benefit.  An  honest  and  fair 
endeavor,  in  the  course  of  their  legitimate  enterprise,  to  accom- 
plish this  is  all  that  can  be  legally  required  of  them. 

There  is  no  proof  in  the  case  that  the  grain  was  lost  or  damaged 
by  being  detained  at  Rockford,  and  the  jury,  probably,  based  their 
verdict  upon  the  hypothesis  that  the  company  was  bound  to  be 
ready,  at  all  events,  to  carry  whatever  amount  of  freight  was  for 
transportation,  and  when  required. 

Judgment  reversed  and  cause  remanded. 

Judgment  reversed.^ 


ILLINOIS  CENTRAL  RAILROAD  CO.  v.  RIVER  AND 
RAIL  COAL  AND  COKE  CO. 

150  Ky.  489.     1912.^ 

Carroll,  J.  The  River  &  Rail  Coal  &  Coke  Company  is  a  cor- 
poration engaged  in  mining  coal  in  Union  county,  and  its  mine 
is  located  on  a  line  of  railway  controlled  and  operated  by  the  ap- 
pellant railroad  company.  This  suit  was  brought  by  the  coal 
company  to  recover  damages  for  the  failure  of  the  railroad  com- 
pany to  furnish  it  cars  for  the  transportation  of  coal  produced  at 
its  mine.  It  was  averred  in  the  petition  that  on  several  named 
days  in  October,  1910,  the  railroad  company  failed  to  furnish  it 
any  cars  in  which  to  load  coal,  although  the  railroad  company  was 
given  timely  and  sufficient  notice  of  the  number  of  cars  that  would 
be  needed  on  those  days.  It  was  further  averred  that  by  reason  of 
the  failure  to  furnish  the  cars  ordered,  or  any  cars,  on  the  days 
mentioned,  operations  at  the  mine  had  to  be  suspended,  thereby 

2  See  Yazoo  &  M.  V.  R.  R.  Co.  v.  Blum  (190G),  89  Miss.  242. 
1  Part  of  the  opinion  is  omitted. —  Ed. 


ADEQUATE    FACILITIES.  411 

incurring  considerable  expense  in  the  pa3mient  of  unemplo)'ed  labor 
and  causing  the  coal  company  to  suffer  loss  in  other  respects  tliat 
are  pointed  out  more  in  detail  in  the  instructions  that  will  be  later 
noticed,  for  all  of  which  it  sought  to  recover  damages.  The  case 
for  the  coal  company  is  not  put  upon  the  ground  that  the  railroad 
company  in  failing  to  furnish  it  cars  was  discriminating  against  it 
or  showing  a  preference  to  other  coal  mines  or  shippers;  but  the 
right  of  recovery  is  rested  upon  the  ground  that  the  railroad  com- 
pany did  not  have  a  legally  adequate  or  sufficient  number  of  coal 
cars  to  supply  the  demands  of  the  trade,  and  in  so  failing  com- 
mitted a  breach  of  duty  for  which  it  was  amenable  in  damages. 

In  its  defense  the  railroad  company  did  not  deny  that  it  failed 
to  furnish  the  cars,  or  dispute  that  reasonable  and  proper  demand 
for  them  had  been  made,  but  sought  to  excuse  its  failure  upon  the 
ground  that,  although  it  had  an  adequate  supply  of  coal  cars,  the 
demand  for  this  class  of  cars  was  so  great  in  October,  1910,  that  it 
could  not  furnish  the  cars  requested  without  discriminating  against 
other  coal  mines  on  its  line  of  road  and  showing  a  preference  to 
the  appellee  coal  company.  Several  issues  are  raised  by  the  plead- 
ings, but  the  real  question  in  the  case  is :  What  is  the  legal  meas- 
ure of  duty  that  a  railroad  company  owes  to  the  operators  of  coal 
mines  in  respect  to  furnishing  them  cars  for  the  transportation  of 
coal? 

At  common  law  the  carrier  was  bound  to  provide  reasonable 
facilities  and  appliances  to  transport  such  goods  as  it  held  itself 
out  ready  to  carry.  Newport  News  Co.  v.  Mercer,  96  Ky.  475,  29 
S.  W.  301,  16  Ky.  Law  Rep.  555 ;  L.  &  N.  E.  R.  Co.  v.  Queen  City 
Coal  Co.,  99  Ky.  217,  35  S.  W.  626,  18  Ky.  Law  Rep.  126.  And 
this  common-law  duty  has  been  incorporated  into  both  the  state  and 
federal  statutes.  Thus  section  783  of  the  Kentucky  Statutes,  which 
treats  of  the  duties  of  railroad  companies  in  furnishing  adequate 
facilities  for  the  transportation  of  freight,  provides  that  "  every  com- 
pany shall  furnish  sufficient  accommodations  for  the  transporta- 
tion of  all  such  passengers  and  property  as  shall  within  a  reason- 
able time  previous  thereto  offer  or  be  offered  for  transportation  at 
places  established  by  the  corporation  for  receiving  and  discharging 
passengers  and  freight."  In  section  1  of  the  act  of  Congress  re- 
lating to  interstate  commerce  it  is  provided  that  "  The  term  '  trans- 
portation '  shall  include  cars  and  other  vehicles  and  all  instru- 
mentalities and  facilities  of  shipment  or  carriage.  .  .  .  And  it 
shall  be  the  duty  of  every  carrier,  subject  to  the  provisions  of  this 
act,  to  provide  and  furnish  such  transportation  upon  reasonable  re- 
quest therefor,  and  to  establish  through  routes  and  adjust  reasonable 
rates  applicable  thereto." 


412  ADEQUATE    FACILITIES.  [CHAP.    VI. 

It  will  thus  be  seen  that  under  the  common  law,  as  well  as  the 
state  and  federal  statutes,  which  are  merely  declaratory  thereof,  a 
common  carrier  is  under  a  legal  duty,  subject  to  exceptions  some 
of  which  will  be  noticed,  not  only  to  provide  itself  with  but  to 
furnish  to  shippers,  when  seasonably  requested,  sufficient  cars  and 
equipment  to  carry  all  of  the  freight  that  may  be  offered  to  it  and 
that  it  holds  itself  out  as  a  carrier  of.  Or,  as  admirably  stated 
in  Hutchinson  on  Carriers,  §  495 :  "  The  first  duty  of  the  com- 
mon carrier  who  holds  himself  out  to  the  public  as  ready  to  engage 
in  the  carrying  business  is,  of  course,  to  provide  himself  with 
reasonable  facilities  and  appliances  for  the  transportation  of  such 
goods  as  he  holds  himself  out  as  ready  to  undertake  to  carry.  He 
must  put  himself  in  a  situation  to  be  at  least  able  to  transport  an 
amount  of  freight  of  the  kind  which  he  proposes  to  carry  equal  to 
that  which  may  be  ordinarily  expected  to  seek  transportation  upon 
his  route,  for,  while  the  law  will  sometimes  excuse  him  for  delay  in 
the  transportation  and  even  for  a  refusal  to  accept  the  goods  which 
may  be  offered  for  carriage  when  there  occurs  an  unprecedented 
and  unexpected  press  of  business,  it  will  not  do  so  when  his  failure 
or  refusal  results  from  his  not  having  provided  himself  with  the 
means  of  present  transportation  for  all  who  may  apply  in  the  regu- 
lar and  expected  course  of  business." 

The  demand  was  not  more  than  the  company  should  reasonably 
have  anticipated  and  prepared  to  meet  at  the  season  of  the  year 
when  this  controversy  arose.  In  fact,  railroad  companies  have  such 
ample  means  of  ascertaining,  in  advance,  the  number  of  cars  that 
each  mine  on  the  road  will  need  during  the  year  or  during  the 
busy  season,  that  it  would  be  a  very  exceptional  state  of  affairs 
when  they  could  not  anticipate  and  prepare  to  meet  the  demands 
of  the  trade.  There  is,  indeed,  less  probability  of  an  unprecedented 
and  unusual  demand  for  cars  arising  in  the  carriage  of  coal  than 
might  occur  with  respect  to  other  commodities,  for  with  the  facili- 
ties afforded  for  rating  the  capacity  of  mines  and  the  fact  that 
the  quantity  of  coal  to  be  mined,  although  gradually  increasing, 
is  generally  fairly  well  known  in  advance,  the  coal  carrying  busi- 
ness is  perhaps  subject  to  fewer  fluctuations  than  arise,  for  ex- 
ample, in  the  transportation  of  grain,  cattle,  and  cotton.  But  in 
view  of  the  fact  that  the  real  defense  relied  on  is  that  the  com- 
pany had  a  sufficient  supply  of  cars  and  equipment  to  meet  the  de- 
mands of  the  trade,  it  does  not  seem  necessary  that  we  should 
notice  with  further  particularity  the  features  of  the  case  relating  to 
the  strike  or  the  unusual  demand  on  its  equipment.  Whether  the 
company  had  or  not  such  facilities  as  were  legally  sufficient  de- 
pends in  a  large  measure  on  the  soundness  of  its  interpretation 


ADEQUATE    FACILITIES.  413 

of  the  measure  of  its  legal  duty  in  providing  itself  with  equipment 
and  furnishing  the  same  to  shippers. 

The  appellant  is  one  of  the  largest  railroad  companies  in  the 
United  States.  Its  tracks  cover  thousands  of  miles  and  traverse 
a  number  of  states.  On  its  lines  of  road  in  at  least  three  states 
there  are  situated  many  coal  mines  in  active  operation,  and  to 
handle  the  coal  trade  it  had,  in  1910,  supplied  itself  with  some 
23,000  coal  cars,  and  it  contends  that  this  number  of  cars  was 
adequate  to  supply  the  demand,  insisting,  however,  that  the  num- 
ber of  cars  required  to  fulfill  its  duty  did  not  impose  upon  it  the  ob- 
ligation to  have  on  hand  the  number  needed  to  meet  the  full  de- 
mands of  the  trade  during  the  fall  and  winter  months  when  the 
movement  of  coal  is  many  times  larger  than  it  is  in  the  spring  and 
summer  months.  In  other  words,  as  we  understand  the  position 
taken  by  counsel,  it  is  this:  That  if  a  railroad  company  has  a 
sufficient  supply  of  cars  to  meet  the  demands  of  the  coal  carrying 
trade  during  the  year,  assuming  that  approximately  the  same 
amount  of  coal  will  be  shipped  during  each  month,  it  has  fulfilled 
its  legal  duty,  although  the  car  supply  may  be  wholly  inadequate  to 
meet  the  demands  of  the  trade  during  the  winter  and  fall  months. 
But  we  do  not  agree  with  counsel  that  this  is  a  fair  or  reasonable 
interpretation  of  the  legal  duty  of  a  railroad  company  engaged  in 
the  coal  carrying  trade  from  mines  along  its  line  of  road;  for,  al- 
though a  railroad  company  might  maintain  a  sufficient  number  of 
cars  to  carry  the  coal  ofi'ered,  if  the  same  quantity  approximately 
was  offered  each  month  in  the  year,  it  might  fall  far  short  of  having 
a  sufficient  number  to  meet  the  demands  of  the  trade  during  the 
fall  and  winter,  because  during  this  season  for  at  least  six  months 
many  more  cars  are  needed  than  are  required  in  the  other  six 
months.  If  the  slack  as  well  as  the  busy  months  of  the  year  are 
to  be  taken  into  consideration  in  estimating  the  equipment  needed, 
the  supply  of  cars  might  be  wholly  inadequate  during  the  busy 
months,  and  yet  there  would  be  a  large  surplus  during 
the  slack  months.  This  difference  between  the  movement  of 
coal  in  the  fall  and  winter  and  the  spring  and  summer  is  a 
matter  of  such  common  and  general  knowledge  that  railroad 
companies  will  not  be  allowed  to  plead  ignorance  of  this  well-known 
condition,  or  with  knowledge  of  it,  to  excuse  their  lack  of  car 
facilities  upon  the  ground  that  if  approximately  the  same  quantity 
of  coal  'was  shipped  and  used  each  month  in  the  year  their  car 
facilities  would  be  ample  to  meet  the  demand.  Nor  does  the  well- 
recognized  principle  that  appellee  was  only  required  to  have  a 
sufficient  supply  of  cars  to  meet  the  normal  demands  of  the  trade 
help  its  defense  because  it  did  not  have  in  our  opinion  such  a 


414  ADEQUATE   FACILITIES.  [CHAP.    VI. 

supply;  for,  conceding  that  a  carrier  is  only  required  to  have  a  car 
supply  adequate  to  meet  the  normal  demands  of  the  trade,  this 
normal  demand  is  not  to  be  estimated  by  the  number  of  cars 
needed  when  the  normal  demand  is  least,  but  by  the  number  needed 
when  the  normal  demand  is  the  heaviest,  in  respect  to  a  com- 
modity such  as  coal,  the  normal  demand  for  which  is  practically 
the  same  during  six  or  eight  months  in  each  year.  And  while  the 
number  needed  in  each  of  these  busy  months  may  be  taken  into 
consideration  in  estimating  the  number  needed  to  supply  the  de- 
mand during  all  these  months,  the  number  needed  to  supply  the 
demand  during  the  spring  and  summer  months  is  entitled  to  little 
consideration  in  determining  what  number  of  cars  is  needed  to 
supply  the  normal  demand.  Of  course,  a  railroad  company  cannot 
tell  with  exact  certainty  the  number  of  cars  that  may  be  needed  to 
meet,  in  the  manner  indicated,  the  normal  demands  of  the  trade, 
as  unexpected  and  unforeseen  conditions  may  arise  that  will  make 
full  performance  of  its  duty  impracticable  and  exonerate  it  from 
liability  for  failing  to  discharge  its  duty;  but  it  can  make  a  fair 
estimate  of  the  number  needed,  based  on  mine  rating  and  capacity 
and  its  experience  in  handling  the  traffic,  and  it  must  supply  itself 
with  and  maintain  the  number  needed  to  meet  the  average  demand 
of  the  trade  during  the  months  when  the  trade  is  heaviest,  and  no 
less  than  this  will  answer  its  duty. 

This  being  our  view  of  the  law,  it  is  quite  clear  from  the  evi- 
dence that  the  railroad  company  did  not  have  a  sufficient  supply  of 
cars  to  meet  the  normal  demand  during  the  busy  months  for  sev- 
eral years,  including  1910,  although  it  had  many  more  than  were 
necessary  during  the  spring  and  summer  months,  and  in  failing 
to  have  a  sufficient  supply  to  fill  the  normal  demand  during  the 
fall  and  winter  months  it  committed  a  breach  of  the  duty  that  it 
owed  to  the  coal  company,  thereby  becoming  liable  to  it  in  damages. 


MERCHANTS  DISPATCH  AND  TRANSPORTATION 
CO.  V.  CORNFORTH. 

3  Colo.  280.     1877.^ 

Thatcher,  C.  J.  The  Merchants'  Dispatch  and  Transportation 
Company  is  a  common  carrier.  Birks  Cornforth,  the  defendant  in 
error,  who  was  the  plaintiff  in  the  court  below,  through  their  agents, 
Raymond  Bros.,  bought  a  car  load  of  fruits,  consisting  of  oranges, 
lemons,  and  bananas,  of  Underbill  &  Stewart,  in  New  York  city. 

1  Part  of  the  opinion  is  omitted. —  Ed. 


ADEQUATE   FACILITIES.  415 

The  fruit  was  delivered  to  and  shipped  by  the  plaintiff  in  error, 
from  New  York  to  Denver,  in  the  month  of  February,  a.  d.  1874. 

There  is  some  evidence  that  the  fruit  was  packed  in  a  re- 
frigerator car  in  New  York  city;  such  a  car,  as  the  testimony  es- 
tablishes, is  usually  employed  in  the  winter  for  that  purpose,  it 
being  well  adapted  to  exclude  the  cold.  The  evidence  conclusively 
shows  that  when  the  fruit  reached  Denver,  it  was  in  an  ordinary 
box  car,  and  badly  frozen.  There  were  apertures  in  the  car  through 
which  the  cold  and  snow  entered.  There  was  snow  all  around  the 
boxes  of  fruit.  It  appears  in  evidence,  that  fruit  shipped  in  a 
common  box  car  will  freeze  in  ordinary  winter  weather,  and  if 
shipped  with  due  care  in  a  refrigerator,  or  other  car  adapted  to  keep 
out  the  cold,  it  will  not  freeze  in  severe  winter  weather. 

Was  the  company  guilty  of  negligence  ? 

When  a  common  carrier  accepts  for  transportation  in  the  winter 
season,  to  ship  half  across  the  continent,  delicate  fruits,  the  char- 
acter of  his  employment,  independent  of  any  contract,  clearly  im- 
plies that  he  will  ship  them  in  such  cars  and  exercise  such  diligence 
as  may  be  reasonably  necessary  for  their  safe  passage  to  their  desti- 
nation. Having  failed  to  do  this  he  cannot  escape  liability.  In  the 
case  of  Wing  v.  The  New  York  and  Erie  E.  E.  Co.,  1  Hilt.  341, 
where  by  the  negligence  of  the  carrier  a  certain  lot  of  potatoes  was 
frozen,  the  court  says :  "  The  fact  that  they  were  perishable  im- 
posed upon  the  defendant  more  than  ordinary  care  and  diligence, 
as  mere  bailees,  and  the  obligation  to  deposit  them  most  securely 
against  cold.  That  it  would  take  longer  to  do  it  does  not  relieve 
them  of  the  duty.  The  intensity  of  the  cold  created  also  the  obli- 
gation of  additional  vigilance,  and  what  was  usual,  was  not  the  con- 
sideration. What  was  necessary  to  be  done,  under  all  the  circum- 
stances, was  the  true  criterion." 

The  rule  here  adopted,  that  the  degree  of  care  and  diligence  to 
be  exercised  by  the  carrier  must  be  commensurate  with  the  nature 
of  the  trust,  is  salutary  and  just. 

The  company,  as  appears  from  the  evidence,  was  guilty  of  the 
most  culpable  negligence  in  transporting  the  fruit  in  a  car  wholly 
unfit  for  the  purpose,  in  the  winter  season.  It  follows  from  what 
we  have  before  said,  that  the  company  is  liable  for  loss  occasioned 
by  such  negligence. 

Let  the  judgment  of  the  court  below  be  affirmed,  with  costs. 

Affirmed.^ 

2  See  Shea  v.  Chicago  R.  I.  &  P.  Ry.  Co.  (1896),  66  Minn.  102;  For- 
rester Co.  V.  Southern  Ry.  Co.   (1908),  147  N.  C.  553. 

Compare  New  York  P.  &  N.  R.  R.  Co.  v.  Cromwell  (1900),  98  Va.  227. 
and  McConnell  v.  Southern  Ry.  Co.   (1907),  144  N.  C.  87. 


416  ADEQUATE    FACILITIES.  [CHAP.   VI. 

EOBINSON  V.   CHICAGO  AND  ALTON  EAILEOAD  CO. 

135  Mich.  254.     1903.^ 

Ereor  to  Circuit  Court,  Kent  County ;  Alfred  Wolcott,  Judge, 
Action  by  Samuel  Eobinson,  Jr.,  administrator  of  Samuel  Eob- 
inson,  deceased,  against  the  Chicago  &  Alton  Eailroad  Company  and 
the  Pullman  Car  Company.     Judgment  for  plaintiff  against  the 
railroad  company,  which  brings  error.     Affirmed. 

Plaintiff  recovered  verdict  and  judgment  for  damages  occasioned 
by  the  death  of  Samuel  Eobinson,  Sr.,  while  a  passenger  upon  a 
train  of  the  defendant  railroad  company,  through  the  alleged  negli- 
gence of  said  company.  The  deceased  left  his  home  in  Charlotte, 
Mich.,  July  2d,  to  attend  the  Democratic  National  Convention  at 
Kansas  City,  Mo.  The  delegation  to  the  convention  from  Michi- 
gan met  in  Cliicago,  having  arranged  with  the  defendant  railroad 
company  for  a  special  train  of  sleeping  cars  to  take  them  from 
Chicago  to  Kansas  City  on  the  night  of  July  3d.  The  train  was 
made  up  of  the  engine,  baggage  car,  five  sleepers,  and  a  dining 
car  in  the  rear.  The  cars  for  convenience  are  numbered  from  the 
front  of  the  train,  1,  2,  3,  4,  and  5.  The  sleepers  were  owned  by 
the  defendant  Pullman  Company,  the  dining  car  by  the  defendant 
railroad  company.  Mr.  Eobinson  had  a  railroad  ticket,  and  also 
a  berth  ticket  in  Pullman  car  No.  3.  The  train  left  Chicago  at  11 
o'clock,  an  hour  late.  After  getting  out  of  the  city,  it  ran  at  a 
high  rate  of  speed.  Mr.  Eobinson  and  some  others  went  to  the 
dining  car  for  refreshments  about  midnight,  where  they  remained 
until  after  the  train  left  Joliet.  They  then  left  the  dining  car  for 
their  respective  sleepers,  and  Mr.  Eobinson  and  some  others  stopped 
for  a  short  time  near  the  forward  end  of  car  No.  4,  to  converse  with 
friends.  One  of  them  passed  through  the  vestibule  into  car  No.  3, 
followed  by  Mr.  Eobinson.  Another  soon  afterwards  passed  from 
No.  4  into  No.  3,  and  inquired  for  Mr.  Eobinson,  desiring  to  speak 
with  him.  He  could  not  be  found.  The  last  time  he  was  seen 
alive  was  when  he  passed  out  of  the  front  door  of  car  No.  4  to 
cross  the  vestibule  into  car  No.  3.  In  doing  so  he  fell  from  the 
car  and  was  killed.  His  dead  body  was  found  the  next  morning 
lying  on  the  east  side  of  the  track  near  a  station  named  Mazona, 
lying  between  the  side  track  and  the  main  track,  near  a  switch 
which  the  train  had  just  passed  over.  The  body,  after  striking  the 
ground,  rolled  about  30  feet.  An  investigation  showed  that  the 
fastenings  of  the  vestibule  door,  through  which  Mr.  Eobinson  fell, 

1  Part  of  the  statement  of  facts  and  part  of  the  opinion  are  omitted. —  Ed. 


ADEQUATE    FACILITIES.  417 

were  defective.  The  evidence  on  the  part  of  the  plaintiff  showed 
that  the  slot  which  held  the  bar  designed  to  keep  the  door  closed 
was  old  and  worn,  and  would  not  hold  the  bar  in  place,  and  that 
the  spring  and  latches,  also  designed  to  keep  the  door  closed,  were 
broken  and  defective.  There  was  evidence  that  the  train  swayed 
considerably  in  its  movements,  so  that  the  passengers  had  to  be 
careful  to  prevent  being  thrown  down  in  passing  through  the  cars, 
or  from  one  car  to  another.  The  theory  of  the  plaintiff  is  that 
Mr.  Kobinson  was  thrown  through  the  open  door  of  this  vestibule. 
The  Pullman  Car  Company  was  made  a  party  as  a  joint  tort  feasor. 
At  the  close  of  the  evidence  the  court  directed  a  verdict  for  the  Pull- 
man Company,  and  left  the  question  of  negligence  of  the  defendant 
railroad  company  to  the  jury. 

Gr-\nt,  J.  (after  stating  the  facts).  1.  It  is  urged  that  the 
manner  in  which  Mr.  Eobinson  met  his  death  is  mere  conjecture, 
and  that,  therefore,  there  can  be  no  recovery.  This  position  is  un- 
tenable. It  is  a  fair  inference  from  the  evidence  adduced  in  be- 
half of  the  plaintiff  that  Mr.  Eobinson  was  thrown  through  the 
vestibule  door.  He  was  seen  to  go  out  of  car  No.  4  for  car  No.  3, 
which  he  did  not  enter.  The  natural  conclusion  is  that  he  either 
voluntarily  jumped  from  the  car  through  this  door,  or  was  thrown 
through  it  by  the  lurching  of  the  train.  There  is  nothing  to  indi- 
cate that  he  intended  to  commit  suicide  by  jumping  from  the  car. 

2.  It  is  next  urged  that  the  court  erred  in  directing  a  verdict  for 
the  Pullman  Car  Company.  This  is  not  a  question  in  which  the 
defendant  railroad  company  is  interested.  The  verdict  and  judg- 
ment are  not  conclusive  of  the  liability  of  the  Pullman  Car  Com- 
pany to  the  railroad  company  under  the  contract  between  them,  by 
which  the  Pullman  Company  furnishes  its  cars  to  be  run  over  the 
defendant  s  road.  Priviite  contracts  between  these  two  companies 
do  not  affect  the  rights  of  travelers.  Plaintiff  has  not  appealed 
from  the  decision  against  him  and  in  favor  of  the  Pullman  Com- 
pany. The  sole  question  left  for  the  jury  was,  is  the  railroad  com- 
pany liable  for  the  defects  in  the  cars  furnished  by  the  Pullman 
Car  Company  to  be  used  by  the  railroad  company  in  transporting 
its  passengers?  If  the  defendant  owed  no  duty  to  its  passengers 
for  defects  in  the  cars  of  the  Pullman  Company,  then  the  railroad 
is  not  liable,  and  the  verdict  should  be  reversed.  If,  on  the  con- 
trary, the  railroad  company,  under  its  contract  of  carriage  with 
its  passengers,  is  liable  for  such  defects,  and  cannot  defend  on  the 
ground  that  under  a  contract  with  the  Pullman  Car  Company  the 
latter  company  furnished  the  cars,  then  the  verdict  must  be  sus- 
tained. The  question  is  not  whether  a  judgment  could  be  main- 
tained by  the  plaintiff  against  the  Pullman  Company,  but  whether 


418  ADEQUATE    FACILITIES.  [CHAP.    VI. 

it  can  be  sustained  against  the  railroad  company.     If  the  court  had 
directed  a  verdict  for  the  railroad  company,  and  had  left  the  ques- 
tion of  the  negligence  of  the  Pullman  Company  in  providing  these 
cars  for  use  of  passengers  to  the  jury,  the  sole  question  would 
have  been,  was  the  Pullman  Company  liable  to  a  passenger  for 
these  defects  in  its  own  cars  ?     Whether  the  Pullman  Car  Company 
is    bound    under    its    contract    to    indemnify    the    railroad    com- 
pany is  not  involved  in  this  litigation.     In  a  suit  by  the  former 
company  against  the  latter  involving  the  liability  of  the  latter  to 
the  former  for  the  injury  the  decision  rendered  by  the  court  in 
this  case  is  not  res  adjudicata.     Upon  that  question  no  such  issue 
is  raised  by  the  pleadings.     Warren  v.  B.  &  M.  R.  Co.,  163  Mass. 
484,  40  N.  E.  895;  Bufhngton  v.  Cook,  35  Ala.  312,  73  Am.  Dec. 
491.     Plaintiff  might  have  brought  suit  against  the  railroad  com- 
pany alone,  or  might  at  any  time  have  discontinued  it  against  the 
Pullman  Car  Company.     Moreland  v.  Durocher,   121  Mich.   398, 
80  N.  W.  284;  Burroughs  v.  Eastman,  101  Mich.  419,  59  N.  W. 
817,  24  L.  R.  A.  859,  45  Am.  St.  Eep.  419.     It  is  unnecessary  to  de- 
termine the  question  of  the  liability  of  the  Pullman  Company  to  the 
plaintiff,  and  we  refrain  from  discussing  it.     The  deceased's  con- 
tract of  carriage  was  not  made  with  the  Pullman  Company ;  it  was 
made  with  the  railroad  company.     He  knew  nothing  of  the  contract 
relations  between  the  two  defendants.     It  is  quite  likely  that  he 
did  not  know  that  the  cars  were  owned,  controlled,  and  managed 
by  a  separate  company.     As  to  the  deceased,  therefore,  the  railroad 
company  owed  to  him  the  duty  to  see  that  the  cars  which  were 
run  over  its  road  were  properly  equipped,  in  good  condition,  and 
properly  managed.     It  failed  in  this  duty,  and  cannot  evade  it  by 
showing  that  it  had  a  contract  with  another  company  to  do  it. 
From  the  description  of  the  defects,  they  evidently  existed  when 
these  cars  were  placed  by  the  defendant  upon  its  tracks  for  the 
transportation  of  the  deceased  and  others.     Defendant  placed  its 
dining  car  at  the  rear  of  the  train,  and  invited  its  passengers  to  go 
to  and  from  it.     It  was  therefore  bound  to  provide  them  a  safe  pas- 
sage from  one  car  to  another.     Penn.  E.  E.  Co.  v.  Eoy,  102  U.  S. 
451,  26  L.  Ed.  141 ;  Dwinelle  v.  N.  Y.  C.  &  H.  R.  R.  Co.,  120  N. 
Y.  117,  24  N.  K  319,  8  L.  R.  A.  224,  17  Am.  St.  Rep.  611.     See, 
■  also,  Robinson  v.  Benev.  Soc,  132  Mich.  695,  94  N.  W.  211.     It 
follows  from  what  we  have  said  that  there  was  no  error  in  refusing 
to  submit  special  questions  4  and  5  to  the  jury. 

3.  It  is,  however,  urged  that,  the  accident  causing  this  injury 
occurring  in  the  state  of  Illinois,  this  case  will  be  ruled  by  the  lex 
loci.  It  is  urged  that  the  courts  of  that  state  have  decided  that 
the  Pullman  Car  Company  is  liable,  and  cite  Nevin  v.  Pullman  Car 


ADEQUATE    FACILITIES.  419 

Company,  106  111.  222,  46  Am.  Eep.  688;  Pullman  Company  v. 
Fielding,  62  111.  App.  577.  In  ISTevin  v.  The  Pullman  Company 
the  plaintiff,  a  passenger,  was  refused  a  berth  in  a  sleeping  car  of 
the  defendant.  In  Pullman  Company  v.  Fielding  a  passenger  oc- 
cupied an  upper  berth.  Becoming  ill  in  the  night,  he  rang  the 
bell  for  the  porter,  desiring  to  be  assisted  in  descending  from  his 
berth.  The  porter  did  not  respond.  Plaintiff  then  attempted 
to  get  out  of  the  berth  alone,  and  by  a  lurching  of  the  car  was 
thrown  and  injured.  It  will  be  observed  that  in  neither  of  these 
was  there  any  defect  in  the  cars  provided  for  in  the  manage- 
ment. The  railroad  company  had  performed  its  duty  towards  the 
traveler  in  furnishing  safe  and  suitable  cars.  The  negligent  acts 
complained  of  were  solely  those  of  the  Pullman  Car  Company's 
employes.  Whether  the  railroad  companies  would  have  been  liable 
as  well  if  the  parties  had  seen  fit  to  sue  them  on  the  ground  that 
the  companies  had  provided  sleeping  cars  for  the  use  of  their  pas- 
sengers was  not  determined  in  either  of  those  cases.  In  Pullman 
Company  v.  Fielding  suit  was  brought  against  both  the  railroad 
company  and  the  Pvillman  Company,  and  a  verdict  rendered  against 
both.  Pending  a  motion  for  a  new  trial,  the  plaintiff  discontinued 
his  suit  against  the  railroad  company.  Those  cases  decided  simply 
that  under  their  facts  the  Pullman  Company  was  liable.  They  do 
not  decide  that  the  railroad  company  was  not  liable.  Neither  do 
they  decide  that  the  railroad  company  would  not  be  liable  to  a  pas- 
senger for  defects  in  cars  furnished  by  the  former  for  the  use  of 
the  latter  in  transporting  its  passengers.  This  contention,  there- 
fore, cannot  be  sustained.^ 


STATE  ex  rel.  MATTOON  v.  EEPUBLICAN  VALLEY 
EAILROAD  CO. 

17  Neb.   647.     1885.^ 

Cobb,  Ch.  J.  This  is  an  original  application  to  this  court  for 
a  writ  of  mandamus  requiring  the  respondent,  the  Eepublican 
Valley  Eailroad  Company,  to  build  within  the  corporate  limits  of 
the  city  of  Blue  Springs  a  depot,  and  to  lay  down  the  necessary 
side  tracks  and  switches,  and  to  stop  its  trains  thereat  for  the 
proper  transaction  of  business. 

So  far  then  as  the  case  is  presented  by  the  pleadings,  it  involves 
these  two  questions: 

2  See  St.  Louis  &  S.  W.  Ry.  Co.  v.  Campbell  (1902).  80  Tex.  Civ.  App. 
35;  Missouri,  K.  &  T.  Ry.  Co.  v.  Harrison   (1904).  97  Tex.  611. 

1  Arguments  of  counsel  and  part  of   the  opinion  are  omitted. —  Ed. 


420  ADEQUATE    FACILITIES.  [CHAP.    VI. 

1,  Is  the  depot  of  respondent  at  Wymore  sufficiently  near  to  the 
business  portion  of  Blue  Springs  as  to  afford  her  inhabitants  and 
merchants,  and  particularly  the  relator,  all  the  facilities  and  ac- 
commodations which  the  respondent  owes  them  as  a  common 
carrier,  one  of  whose  lines  runs  through  the  last  named  city,  with- 
out discrimination  against  the  business  and  inhabitants  thereof? 
If  not,  2,  Is  it  practicable  to  operate  respondent's  branch  line  of 
railroad  between  Wymore  and  Beatrice  with  depots  and  regular 
services  thereat,  both  at  Wymore  and  Blue  Springs? 

The  more  important  and  quasi  public  question  of  the  power  of 
the  courts  in  the  absence  of  legislation  to  compel  the  respondent  to 
establish  and  maintain  a  depot  at  Blue  Springs,  is  raised  by 
respondent  in  its  brief,  and  that  question  will  be  first  consid- 
ered. 

Eelator  in  his  brief  contends  that  the  legislature  of  the  state  has 
imposed  upon  the  respondent  the  duty  of  furnishing  side  tracks 
and  depots,  and  stopping  its  trains  for  the  receipt  and  discharge  of 
passengers  and  freight,  and  the  proper  transaction  of  business  at 
all  places  upon  their  road,  etc.,  and  he  cites  section  121,  of  chapter 
16,  Comp.  Stat.,  in  support  of  that  proposition.  The  section  reads 
as  follows :  "  Sec.  121.  Every  such  railroad  corporation  shall  start 
and  run  their  cars  for  the  transportation  of  passengers  and  property 
at  regular  times  to  be  fixed  by  public  notice,  and  shall  furnish  suf- 
ficient accommodations  for  the  transportation  of  passengers  and 
freight,  and  shall  take,  transport,  and  discharge  all  passengers  to 
and  from  such  stations  as  the  trains  stop  at,  from  or  to  all  places 
and  stations  upon  their  said  road,  on  the  due  payment  of  fare  or 
freight  bill." 

I  do  not  think  that  this  section  furnishes  authority  for  the  inter- 
ference of  the  courts  to  compel  the  establishment  of  a  depot  or 
station  at  any  point  on  the  line  of  respondent's  road,  but  on  the 
contrary,  it  is  quite  apparent  upon  the  face  of  the  section  that 
every  duty  thereby  imposed  is  qualified  by  the  words,  "to  and 
from  such  stations  as  the  trains  stop  at,"  and  its  application  limited 
to  established  depots. 

But  in  the  opinion  of  this  court  it  has  authority  to  grant  relief 
in  cases  such  as  that  presented  in  this  case,  yet  for  the  source  of 
its  authority  it  must  look  to  the  principles  of  the  common  law 
rather  than  to  legislative  enactments.  The  respondent  is  a  com- 
mon carrier  of  persons  and  merchandise.  At  common  law  it  was 
the  duty  of  a  common  carrier  by  land  to  deliver  freight  personally 
to  the  consignee;  but  when  railways  took  the  place  of  convey- 
ances drawn  by  animals,  necessity  required  the  relaxation  of  this 
rule  so  as  to  allow  of  the  substitution  in  place  of  personal  delivery 


ADEQUATE   FACILITIES.  421 

a  delivery  at  the  warehouse  or  depot  provided  by  the  companies 
for  the  storage  of  goods.  Vincent  et  al.  v.  C.  &  A.  E.  E.  Co.,  49 
111.,  33.  Is  it  too  much  to  say  that  this  relaxation  of  the  above  rule 
in  favor  of  railway  companies  as  common  carriers  imposed  upon 
them  the  duty  of  providing  suitable  depots  for  the  purpose  of  such 
delivery?  This  duty  is  so  intimately  connected  with  the  business 
for  which  railways  are  built  and  managed  that  motives  of  self- 
interest  almost  always  secure  its  observance.  But  when  for  any 
reason  it  is  neglected  or  refused,  may  it  not  be  enforced  the  same 
as  any  other  public  duty  ? 

This  question  can  scarcely  be  said  to  be  a  new  one  in  this  court. 
In  the  case  of  The  State,  ex  rel.  Webster,  v.  Nebraska  Telephone 
Co.,  ante  p.  126,  this  court  issued  a  peremptory  mandamus,  com- 
pelling the  respondent  to  place  and  maintain  in  the  office  of  the 
relator  a  telephone  and  transmitter,  such  as  are  usually  furnished 
to  its  subscribers.  In  the  opinion  by  Judge  Eeese,  he  says:  , 
"  Similar  questions  have  arisen  in,  and  have  been  frequently  dis- 
cussed and  decided  by,  the  courts,  and  no  statute  has  been  deemed 
necessary  to  aid  the  courts  in  holding  that  when  a  person  or  com- 
pany undertake  to  supply  a  demand  which  is  '  affected  with  a 
public  interest,'  it  must  supply  all  alike  who  are  alike  situated,  and 
not  discriminate  in  favor  of  nor  against  any."  As  a  question  of 
power,  I  fail  to  see  any  ground  for  distinguishing  between  that 
which  compels  a  telephone  company  to  furnish  a  separate  instru- 
ment for  the  accommodation  of  one  customer,  and  that  which  would 
compel  a  railroad  company  to  make  stoppage  of  its  trains  and 
furnish  depot  accommodations  to  a  whole  community.  In  neither 
case  would  any  court  interfere  except  where  it  is  made  to  appear 
that  such  interference  is  necessary  to  prevent  an  unjust  discrimina- 
tion, or  an  abuse  of  that  discretion  which  must  be  conceded  to  re- 
side in  all  private  corporations  in  respect  to  their  dealings  with  the 
public. 

The  record  in  this  case  does  not  present  the  question  of  the  power 
of  the  state  to  impose  new  duties  upon  railroad  companies,  or  to 
take  away  or  limit  their  powers  by  appropriate  legislation.  Nor 
does  it  present  the  question  of  the  power  of  the  courts  to  enforce 
the  performance  of  every  duty  enjoined  upon  such  corporations, 
either  by  the  acts  under  which  they  derive  their  corporate  ex- 
istence or  other  legislation.  If  either  of  these  questions  were  pre- 
sented there  would  be  abundant  authority  for  their  decision  in  the 
works  and  cases  cited  by  counsel.  But  upon  the  precise  point  of 
the  power  of  the  court  to  enforce  the  discharge  of  a  duty  by  the 
railroad  company  not  specially  enjoined  upon  it  by  the  terms  of 
its  charter,  nor  any  provision  of  statutory  law,  which,  as  above 


432  ADEQUATE   FACILITIES.  [CHAP.   VI. 

stated,  I  conceive  to  be  the  turning  point  in  this  case,  there  is  but 
very  little. 

There  are  many  opinions  of  courts  and  dicta  in  cases  cited  by 
counsel  wherein  tlie  assumed  right  of  railway  corporations  to  dis- 
criminate between  shippers  and  others  is  discussed,  deprecated,  and 
denied.  Such  discrimination  is  in  but  few  cases  upheld,  and  then 
only  when  such  discrimination  is  shown  not  to  be  unjust  to  the 
complaining  party.  The  remarks  of  Chief  Justice  Beasley,  of  the 
supreme  court  of  New  Jersey,  in  the  case  of  Messenger  v.  Pennsyl- 
vania Pt.  E.  Co.,  36  N.  J.  L.,  407,  are  so  entirely  in  accord  with 
the  views  of  this  court  that  I  deem  it  not  out  of  place  to  trans- 
cribe them  here.  "  A  company  of  this  kind  is  invested  with  im- 
portant prerogative  franchises,  among  which  are  the  rights  to  build 
and  use  a  railway,  and  to  cliarge  and  take  tolls  and  fares.  These 
prerogatives  are  grants  from  the  government,  and  public  utility  is 
the  consideration  for  them.  Although  in  the  hands  of  a  private 
corporation  they  are  still  sovereign  franchises,  and  must  be  used 
and  treated  as  such,  they  must  be  held  in  trust  for  the  general 
good.  If  they  had  remained  under  the  control  of  the  state,  it  could 
not  be  pretended  that  in  the  exercise  of  them  it  would  have  been 
legitimate  to  favor  one  citizen  at  the  expense  of  another.  If  a 
state  should  build  and  operate  a  railroad,  the  exclusion  of  every- 
thing like  favoritism  with  respect  to  its  use  would  seem  to  be  an. 
obligation  that  could  not  be  disregarded,  without  violating  natural 
equity  and  fundamental  principles.  And  it  seems  to  me  impossible 
to  concede  that  when  such  rights  as  these  are  handed  over  on  public 
considerations  to  a  company  of  individuals,  such  rights  lose  their 
essential  characteristics.  I  think  they  are  unalterably  parts  of  the 
supreme  authority,  and  in  whatsoever  hands  they  may  be  found 
they  must  be  considered  as  such.  In  the  use  of  such  franchises  all 
citizens  have  an  equal  interest  and  equal  rights,  and  all  must,  under 
the  same  circumstances,  be  treated  alike.  It  cannot  be  supposed 
that  it  was  the  legislative  intention  when  such  privileges  were 
given  that  they  were  to  be  used  as  private  property  at  the  discretion 
of  the  recipient,  but,  to  the  contrary  of  this,  I  think  an  implied  con- 
dition attaches  to  such  grants  that  they  are  to  be  held  as  a  quasi 
public  trust  for  the  benefit,  at  least  to  a  considerable  degree,  of  the 
entire  community.  In  their  very  nature  and  constitution,  as  I 
view  this  question,  these  companies  become,  in  certain  aspects, 
public  agents,  and  the  consequence  is  they  must  in  the  exercise  of 
their  calling  observe  to  all  men  a  perfect  impartiality." 

^^^lile  I  frankly  admit  that  I  am  able  to  find  no  case  —  cer- 
tainly none  has  been  cited  by  counsel  —  where  the  above  principles 
have  been  applied  to  circumstances  exactly  like  those  of  the  case 


ADEQUATE   FACILITIES.  423 

at  bar,  yet  I  am  unable  to  distinguish  it  in  principle  from  those 
in  which  it  has  been  often  applied,  and  we  are,  I  think,  unani- 
mously of  the  opinion  that  they  furnish  us  sufficient  warrant  for 
the  exercise  of  the  authority  invoked. 

As  to  the  two  questions  presented  by  the  record  as  above  stated 
—  1,  Whether  the  depot  of  respondent  at  Wymore  is  sufficiently 
near  to  the  business  portion  of  Blue  Springs  as  to  afford  the  latter 
named  place  all  the  facilities  and  accommodations  which  the  re- 
spondent owes  to  them,  as  a  common  carrier,  etc.?  And  if  not, 
then,  2,  Is  it  practicable  to  operate  respondent's  branch  line  of 
railroad  between  Wymore  and  Beatrice  with  depots  and  regular 
service  thereat  both  at  Wymore  and  Blue  Springs?  —  we  have, 
upon  thorough  examination  of  the  evidence  and  consideration  of 
the  same,  together  with  arguments  thereon,  as  well  at  the  bar  as  in 
the  exhaustive  printed  briefs  of  counsel,  found  both  of  these  ques- 
tions for  the  relator. 

A  peremptory  writ  will  therefore  issue,  substantially  as  prayed, 
with  costs,  etc. 

Judgment  Accordingly.'^ 

The  other  judges  concur. 


STATE  ex  rel.  SMART  v.  KAXSAS  CITY,  SHEEVE- 
PORT  AXD  GULF  RAILWAY  CO. 

51  La.  Ann.  200.     1899.^ 

NiCHOLLS,  C.  J.  ■  As  matters  stand  the  only  question  before  us 
is  whether,  as  a  matter  of  law,  the  plaintiffs  have  the  right,  through 
mandamus,  to  force  the  defendant  to  establish  a  depot  at  Leesville. 
The  supreme  court  of  the  United  States  was  called  upon  to  con- 
sider this  question  in  Railroad  Co.  v.  Washington  Ter.,  1-12  U.  S. 
492,  12  Sup.  Ct.  283,  under  a  state  of  facts  very  similar  to  those 
alleged  by  the  plaintiffs  in  their  petition.  The  facts  of  that  case, 
as  shown  by  the  report  of  the  court's  opinion,  were  that  "  the 
Northern  Pacific  Railroad  at  one  time  stopped  its  trains  at  Yakima 
City,  but  never  built  a  station  there,  and  after  completing  its  road 
four  miles  further,  to  North  Yakima,  established  there  a  freight 
and  passenger  station ;  that  North  Yakima  was  a  town  laid  out  by 
the  defendant  on  its  own  unimproved  land;  that,  after  having  es- 
tablished this  depot,  defendant  ceased  to  stop  its  trains  at  Yakima 

2  See  People  ex  rel.  Hunt  v.  Chicago  &  A.  R.  R.  Co.   (1889),  130  111.  175. 
Compare   Chicago  &   A.   R.   R.   Co.   v.   People    (1894).    152   111.   230.   and 
Chicago,  R.  I.  &  P.  Ry.  Co.  v.  Nebraska  Ry.  Com.   (1910),  85  Neb.  818. 

1  Part  of  the  opinion  is  omitted. —  Ed. 


424  ADEQUATE    FACILITIES.  [CHAP.    VI. 

City.  In  consequence,  apparently,  of  this,  Yakima  City,  which 
at  the  time  of  the  filing  of  the  petition  for  mandamus  was  the 
most  important  town,  in  population  and  business,  in  the  county, 
rapidly  dwindled,  and  most  of  its  inhabitants  removed  to  North 
Yakima,  which  at  the  time  of  the  verdict  had  become  the  largest 
and  most  important  town  in  the  county.  The  defendant  could 
build  a  station  at  Yakima  City,  but  the  cost  of  building  one  would 
be  eight  thousand  dollars,  and  the  expense  of  maintaining  it  one 
hundred  and  fifty  dollars  a  month,  and  the  earnings  of  the  whole 
of  this  division  of  the  defendant's  road  are  insufficient  to  pay  the 
running  expenses. 

"  There  were  other  stations  for  receiving  freight  and  passengers 
between  Yakima  and  Pasco  Junction,  which  furnished  sufficient 
facilities  for  the  country  south  of  North  Yakima,  which  included 
Yakima  City;  and  the  passenger  and  freight  traffic  of  the  people 
living  in  the  surrounding  country,  considering  them  as  a  com- 
munity, would  be  better  accommodated  by  a  station  at  North 
Yakima  than  by  one  at  Yakima  City.  After  the  verdict,  and 
before  the  district  court  awarded  the  mandamus,  the  county  seat 
was  removed  by  the  territorial  legislature  from  Yakima  City  to 
North  Yakima." 

In  discussing  the  question  the  supreme  court  of  the  United 
States  declared  that  "  a  writ  of  mandamus  to  compel  a  railroad  cor- 
poration to  do  a  particular  act  in  constructing  its  road  or  buildings, 
or  in  running  its  trains,  can  be  issued  only  when  there  is  a  specific 
legal  duty  on  its  part  to  do  that  act,  and  clear  proof  of  that  duty. 
If,  as  in  Railroad  Co.  v.  Hall,  91  LT.  S.  343,  the  charter  of  a  rail- 
road company  expressly  requires  it  to  maintain  its  railroad  on  a 
continuous  line,  it  may  be  compelled  to  do  so  by  mandamus. 

"  The  difficulties  in  the  way  of  issuing  a  mandamus  to  compel 
the  maintenance  of  a  railroad  and  the  running  of  trains  to  a 
terminus  fixed  by  the  charter  itself  are  much  increased  w^hen  it  is 
sought  to  compel  the  corporation  to  establish  or  to  maintain  a 
station  and  to  stop  its  trains  at  a  particular  place  on  the  line  of 
its  road.  The  location  of  stations  and  warehouses  for  receiving 
and  delivering  passengers  and  freight  involves  a  comprehensive 
view  of  the  interests  of  the  public,  as  well  as  of  the  corporation 
and  its  stockholders,  and  a  consideration  of  many  circumstances 
concerning  the  amount  of  population  and  business  at  or  near, 
or  within  convenient  access  to,  one  point  or  another,  which 
are  more  appropriate  to  be  determined  by  the  directors,  or,  in 
case  of  their  abuse,  by  the  legislature,  or  by  administrative 
boards  intrusted  by  the  legislature  with  that  duty,  than  by  the 
ordinary  judicial  tribunals." 


ADEQUATE    FACILITIES.  425 

Eef erring  to  the  case  directly  before  it,  the  court  said :  "  To 
hold  that  the  directors  of  this  company,  in  determining  the  num- 
ber, place,  and  size  of  its  stations  and  other  structures,  having  re- 
gard to  the  public  convenience  as  well  as  its  own  pecuniary  inter- 
ests, can  be  controlled  by  the  courts  by  writ  of  mandamus,  would 
be  inconsistent  with  many  decisions  of  high  authority  in  analogous 
cases." 

The  court  quoted  approvingly  from  People  v.  New  York,  L.  E. 
&  W.  K.  Co.,  104  N.  Y.  58,  66,  67,  9  N.  E.  856,  in  which  the 
court  of  appeals  refused  to  grant  a  mandamus  to  compel  a  railroad 
corporation  to  construct  and  maintain  a  station  and  warehouse  of 
sufficient  capacity  to  accommodate  passengers  and  freight  at  a 
village  containing  1,200  inhabitants,  and  furnishing  to  the  de- 
fendant at  its  station  therein  a  large  freight  and  passenger  business, 
although  it  was  admitted  that  its  present  building  at  that  place 
was  entirely  inadequate;  that  the  aljsence  of  a  suitable  one  was  a 
matter  of  serious  damage  to  large  numbers  of  persons  doing  busi- 
ness at  that  station;  that  the  railroad  commissioners  of  the  state, 
after  notice  to  the  defendant,  had  adjudged  and  recommended  that 
it  should  construct  a  suitable  building  there  within  a  certain  time ; 
and  that  the  defendant  had  failed  to  take  any  steps  in  that  direc- 
tion, not  for  want  of  means  or  ability,  but  because  its  directors  had 
decided  that  its  interests  required  it  to  postpone  doing  so. 

The  court,  speaking  by  Judge  Danforth,  while  recognizing  that 
"  a  plainer  case  could  hardly  be  presented  of  a  deliberate  and  in- 
tentional disregard  of  the  public  interest  and  the  accommodation 
of  the  public,"  yet  held  that  it  was  powerless  to  interpose,  be- 
cause the  defendant,  as  a  carrier,  was  under  no  obligation  at  com- 
mon law  to  provide  warehouses  for  freight  offered,  or  station  houses 
for  passengers  waiting  transportation,  and  no  such  duty  was  im- 
posed by  the  statutes  authorizing  companies  to  construct  and  main- 
tain railroads  "for  public  use  in  the  conveyance  of  persons  and 
property,"  and  "  to  erect  and  maintain  all  necessary  and  convenient 
buildings  and  stations  "  for  the  accommodation  and  use  of  their 
passengers,  freight,  and  business,  and  because,  under  the  statutes 
of  New  York,  the  proceedings  and  determinations  of  the  railroad 
commissioners  amounted  to  nothing  more  than  a  request  for  in- 
formation, and  had  no  eifect  beyond  advice  to  the  railroad  com- 
pany and  suggestion  to  the  legislature,  and  could  not  be  judicially 
enforced. 

The  court  said :  "  As  the  duty  sought  to  be  imposed  upon  the 
defendant  is  not  a  specific  duty  prescribed  by  statute,  either  in 
terms  or  by  reasonable  construction,  the  court  cannot,  no  matter 
how  apparent  the  necessity,  enforce  its  performance  by  mandamus.^ 


426  ADEQUATE    FACILITIES.  [CHAP.    VI. 

It  cannot  compel  the  erection  of  a  station  house,  nor  the  enlarge- 
ment of  one.  As  to  that  the  statute  imports  an  authority  only,  not 
a  command,  to  be  availed  of  at  the  option  of  the  company,  in  the 
discretion  of  its  directors,  who  are  empowered  by  statute  to  manage 
'  its  affairs,'  among  which  must  be  classed  the  expenditure  of  money 
for  station  buildings  or  other  structures  for  the  promotion  of  the 
convenience  of  the  public,  having  regard  to  its  own  interest.  With 
the  exercise  of  that  discretion  the  legislature  only  can  interfere.  No 
doubt,  as  the  respondent  urges,  the  court  may  by  mandamus  also 
act  in  certain  cases  affecting  corporate  matters,  but  only  where  the 
duty  concerned  is  specific,  and  plainly  imposed  upon  the  corpora- 
tion." 

"  Such  is  not  the  case  before  us.  The  grievance  complained  of  is 
an  obvious  one,  but  the  burden  of  removing  it  can  be  imposed  upon 
the  defendant  only  by  legislation.  The  legislature  created  the  cor- 
poration, upon  the  theory  that  its  functions  should  be  exercised  for 
the  public  benefit.  It  may  add  other  regulations  to  those  now 
binding  it,  but  the  court  can  interfere  only  to  enforce  a  duty  de- 
clared by  law.  The  one  presented  in  this  case  is  not  of  that  char- 
acter.    Nor  can  it  by  fair  or  reasonable  construction  be  implied."  - 

The  mandamus  in  Eailroad  Co.  v.  Washington  Ter.  was  re- 
fused, though  presented  in  the  name  of  the  territory  on  the  re- 
lation of  its  prosecuting  attorney.  The  mandamus  in  the  case  at 
bar  was  presented  in  the  name  of  private  individuals,  whose  special 
interest  in  the  subject-matter,  as  differing  from  that  of  the  public 
at  large,  and  giving  them  a  right  to  stand  in  judgment,  might  be 
questioned.  No  issue  was  made,  however,  upon  that  point  in  the 
briefs  or  argument. 

In  Southeastern  Ey.  v.  Eailway  Com'rs,  6  Q.  B.  Div.  586,  592,  a 
railway  company  was  held,  by  Lord  Chancellor  Selborne,  Lord 
Chief  Justice  Coleridge,  and  Lord  Justice  Brett,  in  the  English 
court  of  appeal,  to  be  under  no  obligation  to  establish  stations  at 
any  particular  place  or  places,  unless  it  thought  fit  to  do  so,  and 
was  held  bound  to  afford  improved  facilities  for  receiving,  for- 
warding, and  delivering  passengers  and  freight  at  a  station  once 
established,  and  used  for  the  purpose  of  traffic,  only  so  far  as  it 
had  been  ordered  to  afford  them  by  the  railway  commissioners, 
within  powers  expressly  conferred  by  act  of  parliament. 

The  decisions  in  Eailroad  Co.  v.  Washington  Ter.  and  in  People 
V.  New  York,  L.  E.  &  W.  E.  Co.,  104  N.  Y.  58,  66,  67,  9  N.  E. 
856,  were,  in  our  opinion,  based  upon  correct  principles,  which 
should  and  must  control  the  present  case. 

For  the  reasons  herein  assigned,  it  is  ordered,  adjudged,  and 

2  But  see  People  v.  Del.  &  H.  Canal  Co.  (1901),  165  N.  Y.  362. 


ADEQUATE   FACILITIES.  427 

decreed  that  the  judgment  of  the  district  court  be  afifirmed,  with- 
out prejudice.^ 

MINNEAPOLIS  AND  ST.  LOUIS  KAILEOAD  CO.  v. 
STATE  OF  MINNESOTA. 

193  U.   S.  53.     1904.^ 

Mr.  Justice  McKenna  delivered  the  opinion  of  the  court. 

This  is  a  proceeding  in  mandamus  to  compel  plaintiff  in  error 
to  build  and  maintain  a  station  house  on  the  line  of  its  road  at 
the  village  of  Emmons,  in  compliance  with  an  order  of  the  Rail- 
road &  Warehouse  Commission  of  the  state  of  Minnesota. 

The  order  of  the  commission  was  made  upon  petition  and  upon 
hearing  after  due  notice  to  plaintiff  in  error.  The  writ  was  granted 
by  the  district  court  of  Freeborn  county,  where  the  proceedings 
were  commenced. 

The  railroad  company  in  its  answer  attacks  the  statute  under 
which  the   commission   acted   as   follows : 

"  This  respondent  says  further,  that  chapter  370,  General  Laws 
1901,  approved  April  13,  1901,  which  was  enacted  by  the  legisla- 
ture of  said  state  at  its  thirty-second  session,  which  arbitrarily  re- 
quires railroad  carriers  to  provide  freight  and  passenger  rooms  and 
depots  at  all  villages  and  boroughs  upon  their  respective  roads, 
without  regard  to  the  necessity  therefor  and  without  regard  to  the 
location  or  situation  of  such  village  or  boroughs,  or  to  existing  con- 
ditions, is  unjust,  unreasonable,  contrary  to  public  policy,  and 
void. 

"  It  denies  to  the  respondent  the  right  to  reasonably  manage  or 
control  its  own  business ;  it  takes  its  property  without  its  consent. 

"  It  takes  the  property  of  this  respondent  arbitrarily  and  un- 
necessarily, for  public  use,  without  just  compensation,  and  is, 
therefore,  violative  of  the  5th  Amendment  to  the  Constitution  of 
the  United  States. 

"  It  deprives  the  respondent  of  its  property  without  due  process 
of  law,  and  denies  it  the  equal  protection  of  the  laws,  and  thus 
violates  the  14th  Amendment  to  the  Constitution  of  the  United 
States." 

The  Supreme  Court  of  the  State  affirmed  the  judgment  of  the 
District  Court,  the  members  of  the  court  equally  dividing  on  the 
facts.     91  N,  W.  Eep.  465. 

This  is  the  second  attempt  of  the  village  of  Emmons  to  secure 

3  See  Nashville,  C.  &  St.  L.  Ry.  Co.  v.  State  (1902),  137  Ala.  439. 
1  Arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


428  ADEQUATE   FACILITIES.  [CHAP.    VI. 

a  depot.  The  first  was  unsuccessful,  76  Minn.  469,  79  N.  W.  510, 
"  wherein  the  facts  are  stated,"  the  Supreme  Court  observed ;  and 
it  further  observed,  passing  on  the  case  at  bar : 

"  Mr.  Associate  Justice  Lovely  having  been  of  counsel  for  the 
village  in  the  former  proceeding,  was  disqualified  from  sitting  at 
the  hearing  of  this  appeal,  and  the  cause  was  necessarily  argued 
and  submitted  to  the  four  remaining  members  of  the  court.  We 
assume  that  Laws  1901,  chapter  270,  which,  in  express  terms,  re- 
quires railway  companies  to  build  and  maintain  depots  or  station 
houses  in  all  villages  through  which  their  roads  may  pass,  is  in 
itself  valid  legislation,  and  not  open  to  the  objection  that  it  is  not 
within  the  legislative  power  to  enact  such  a  law.  With  this  as- 
sumption no  dispute  has  arisen  over  a  construction  of  the  act,  to 
the  efi^ect  that  all  incorporated  villages  within  this  state  located 
on  railway  lines  are  prima  facie  entitled  to  depots.  (The  commis- 
sioners have  the  power  to  order  the  erection  and  maintenance  of 
depot  buildings  unless  it  is  made  to  appear  that  such  an  order 
would  be  so  unreasonable  in  its  terms  as  to  actually  result  in  de- 
priving the  company  proceeded  against  of  its  property  without 
due  process  of  lawj  The  change  made  by  the  statute  of  1901 
simply  aft'ects  or  shifts  the  burden  of  proof;  for,  prior  to  its  en- 
actment, the  burden  was  on  the  municipality  to  establish  the  rea- 
sonableness and  necessity  of  a  depot  therein,  while  now  a  railway 
company  appearing  before  the  commissioners,  or  trying  its  case 
on  appeal  to  the  District  Court,  bears  the  burden  of  showing  that 
such  a  requirement  is  not  called  for,  and  that  the  building  and 
maintenance  of  a  depot  in  the  village  is  unnecessary  and  unrea- 
sonable. 

"  But,  while  agreeing  as  to  this  interpretation  of  the  law,  we  fail 
to  reach  the  same  conclusion  in  respect  to  the  facts.  We  do  not 
question  the  correctness  of  the  conclusion  reached  when  consider- 
ing the  former  appeal.  But  two  members  of  the  court,  Chief 
Justice  Start  and  Associate  Justice  Brown,  are  of  the  opinion 
that,  from  the  evidence,  it  appears  that  there  has  since  been  a 
substantial  growth  in  the  village, —  a  growth  which  makes  an  alto- 
gether different  showing, —  and  that  the  company  did  not  overcome 
the  prima  facie  case  arising  by  virtue  of  the  statute,  and  therefore 
that  the  judgment  appealed  from  should  be  affirmed.  Associate 
Justices  Collins  and  Lewis  are  unable  to  agree  to  this.  Their  con- 
clusion is  that  the  testimony  fails  to  show  that  there  has  been  a 
real  or  substantial  change  in  the  village,  its  needs  or  necessities, 
that  the  situation  is  practically  as  it  was  when  the  former  pro- 
ceeding was  considered,  and  that  the  prima  facie  case  made  by 
the  village  has  been  wholly  overcome  by  the  defendant  company. 


ADEQUATE    FACILITIES.  439 

"With  this  difference  of  opinion  the  judgment  appealed  from 
must  be,  and  hereby  is,  affirmed." 
The  act  of  1897  provided  as  follows : 

"  That  all  railroad  corporations  or  companies  operating  any  rail- 
road in  this  state  shall  .  .  .  provide  at  all  villages  and  boroughs 
on  their  respective  roads  depots  with  suitable  waiting  rooms  for 
the  protection  and  accommodation  of  all  passengers  patronizing 
such  roads,  and  a  freight  room  for  the  storage  and  protection  of 
freight.  .  .  .  Such  railroad  corporations  or  companies  shall,  at 
such  depots  or  stations,  stop  their  trains  regularly  as  at  other  sta- 
tions, to  receive  and  discharge  passengers,  and,  for  at  least  one 
half  hour  before  the  arrival,  and  one  half  hour  after  the  arrival,  of 
any  passenger  train,  cause  their  respective  depots  or  waiting  rooms 
to  be  open  for  the  reception  of  passengers ;  said  depots  to  be  kept 
well  lighted  and  warmed  for  the  space  of  time  aforesaid." 

In  its  first  opinion  (76  Minn.  469,  79  N.  W.  510),  the  court  held 
that  the  word  "villages,"  in  the  act  meant  incorporated  villages, 
and  that  Emmons  was  not  incorporated.  The  court,  however,  pro- 
ceeded further,  and  said : 

"  But  there  is  no  doubt  of  the  power  of  the  commissioners,  under 
the  general  railroad  and  warehouse  commission  act,  to  require  a 
railroad  company  to  provide  a  suitable  depot  and  passenger  wait- 
ing room  at  any  place,  incorporated  or  unincorporated,  where  public 
necessity  or  convenience  reasonably  requires  it  to  be  done.  But 
this  power  is  neither  absolute  nor  arbitrary.  The  facts  must  be 
such,  having  regard  to  the  interests,  not  only  of  the  particular  local- 
ity, but  also  of  the  public  at  large  and  of  the  railroad  company 
itself,  as  to  justify  the  commissioners,  in  the  exercise  of  a  reason- 
able discretion  and  judgment,  in  ordering  the  railway  company  to 
provide  a  depot  and  passenger  station  at  the  place  in  question. 
Counsel  for  the  relators  admit  this.  The  only  evidence  being  the 
report  of  the  commissioners  themselves,  we  must  refer  to  it  to 
ascertain  whether  the  facts  therein  stated  reasonably  justified  their 
order  requiring  the  railroad  company  to  provide  and  maintain  a 
depot  and  station  at  Emmons.  The  statute  provides  that,  '  upon 
the  trial  of  said  cause  [before  the  court,  as  in  this  case,  to  enforce 
the  order  of  the  commissioners],  the  findings  of  fact  of  said  com- 
mission as  set  forth  in  its  report  shall  be  prima  facie  evidence  of 
the  matters  therein  stated.'     (Gen.  Stat.  1894,  §  399.)  " 

The  court  then  reviewed  tbe  facts,  and  decided  that  the  order 
of  the  commission  establishing  a  station  at  Emmons  was  unrea- 
sonable. The  act  was  amended  in  1901,  and  the  court  in  the  case 
at  bar  has  decided,  as  we  have  seen,  the  amendment  has  only 
shifted  the  burden  of  proof.     In  other  words,  to  quote  from  the 


430  ADEQUATE   FACILITIES.  [CHAP.    VI. 

opinion  of  the  court,  "  incorporated  villages  within  this  state 
(Minnesota)  located  on  railway  lines  are  prima  facie  entitled  to 
depots,"  and  at  a  hearing  before  the  commissioners  and  in  the 
district  court  the  railroad  has  the  burden  of  showing  that  the  estab- 
lishment of  a  depot  is  unreasonable  and  unnecessary. 

The  statute,  as  thus  construed,  does  not  transcend  the  power  of 
the  state.  In  other  words,  and  meeting  exactly  the  contention  of 
plaintiff  in  error,  the  statute  does  not  deny  plaintiff  in  error  the 
right  to  reasonably  manage  or  control  its  property  or  arbitrarily 
take  its  property  without  its  consent  or  without  compensation  or 
due  process  of  law.  Wisconsin,  M.  &  P.  E.  Co.  v.  Jacobson,  179 
U.  S.  287.  To  establish  stations  at  proper  places  is  the  first  duty  of 
a  railroad  company.  The  State  can  certainly  provide  for  the 
enforcement  of  that  duty.  An  incorporated  village  might  be  said 
to  be  such  a  place  without  an  express  declaration  of  the  statute.  To 
make  it  prima  facie  so  by  statute  and  to  impose  the  burden  of  meet- 
ing the  presumption  thence  arising,  certainly  does  not  amount  to 
an  invasion  of  the  rights  of  property  or  an  unreasonable  control  of 
property. 

There  is  no  statement  of  facts  by  the  supreme  court,  and  its 
decision,  though  by  a  divided  court,  constituted  an  affirmance  of 
the  finding  of  the  district  court.     The  finding  was  as  follows : 

"  That  the  respondent  railroad  company  has  no  depot  or  station 
house  whatever  for  the  accommodation  of  the  public  upon  its  line 
of  railroad  at  the  village  of  Emmons,  and  that  its  line  of  road  is  the 
only  railroad  reaching  such  village. 

"  That  there  is  a  suitable  location  for  a  depot  or  station  house 
upon  respondent's  right  of  way  at  the  point  referred  to  and  de- 
scribed in  the  order  of  the  board  of  railroad  and  warehouse  com- 
missioners herein,  which  order  is  hereto  attached.  That  it  is  nec- 
essary for  the  accommodation  of  the  citizens  of  Emmons  and  vi- 
cinity, and  the  public  at  large,  and  public  necessity  requires  that  the 
respondent  railroad  company  build  and  maintain  a  suitable  station 
house  at  the  said  village  of  Emmons  for  the  accommodation  of 
the  public  transacting  business  with  the  respondent  at  that  point." 

The  finding,  like  the  verdict  of  a  jur}^  is  conclusive  in  this  court. 
Dower  v.  Richards,  151  U.  S.  658.  It  follows  that  the  order  of  the 
Warehouse  Commission  was  not  an  unreasonable  requirement,  and 
the  judgment  is  affirmed.^ 

2  Compare  Missouri,  K.  &  T.  Ry.  Co.  v.  State  (1910),  107  Pac.  (Okl.) 
172,  and  cases  there  cited,  as  to  the  power  of  legislatures  and  commissions 
to  order  the  stopping  of  particular  trains  at  particular  stations. 


ADEQUATE    FACILITIES,  431 


PEOPLE  Qx  rel.  SPKUANCE  v.  CHICAGO  AND 
NOETHWESTERX  EAILWAY  CO. 

57   111.   43G.     1870.^ 

Me.  Justice  Walker  delivered  the  opinion  of  the  Court. 

This  was  a  proceeding  by  mandamus,  on  the  part  of  appellants, 
in  the  Superior  Court  of  Chicago,  against  appellees.  The  object  of 
the  proceeding  was,  to  compel  the  railroad  company  to  permit  the 
junction  of  a  railway  track  from  the  grain  elevator  of  appellants, 
with  the  main  track  of  appellees'  road,  and  when  thus  connected, 
to  compel  the  company  to  deliver  at  the  warehouse  all  grain  shipped 
to  it,  for  storage.  The  writ  avers,  that  the  warehouse  was  erected 
by  Maher  and  Xewberry  in  the  year  1863,  on  land  then,  and  now, 
owned  by  Maher;  that  the  elevator  is  a  public  warehouse  for  the 
storage  of  grain;  that  the  railway  company,  under  an  ordinance 
of  the  city,  laid  and  constructed  their  railway  tracks  from  the  west- 
ern limits  of  the  city  along  Kinzie  street,  across  the  north  branch 
of  the  Chicago  river,  and  thence  along  ISTorth  Water  street  to  the 
lake  shore. 

It  is  averred,  on  the  belief  of  the  relators,  that  before  the  ware- 
house was  erected,  an  agreement  was  made  between  the  Galena 
&  Chicago  Union  Eailroad  Company  (which  was  subsequently  con- 
solidated with  appellees'  company)  and  Maher,  that  a  switch  might 
be  placed  in  their  track,  and  a  road  run  thence  to  the  warehouse, 
which  was  intended  to  enable  freight  cars  to  pass  from  their  main 
track  to  the  warehouse,  and  there  discharge  grain  shipped  to  it 
for  storage;  and  that  Maher  and  Newberry  obtained  a  license  to 
make  such  connection,  from  the  city,  by  an  ordinance  duly  adopted ; 
and,  thereupon,  one  Hiram  Wheeler  obtained,  by  lease  of  Maher, 
his  interest  in  this  elevator,  and  he  thereupon  constructed  a  rail- 
road track  from  the  main  line  of  the  company  to  the  warehouse,  and 
the  company  from  that  time  used  the  same,  and  ran  their  cars 
to  the  elevator,  and  there  discharged  such  grain  as  was  consignel 
to  it  for  storage;  that  some  time  during  the  year  1865,  Wheeler 
ceased  to  have  any  interest  in  this  warehouse,  and  the  railroad 
company  thence  refused  to  deliver  grain  at  that  warehouse;  that 
about  a  year  afterwards,  Wheeler,  who  had  control  of  a  portion  of 
the  ground  over  which  this  track  ran,  compelled  its  removal,  and 
the  connection  was  thus  broken  with  the  consent  of  the  company; 
that  appellants  became  the  lessees  of  the  warehouse  in  August,  1869 ; 
that  they  had  complied  with  the  ordinance  of  the  city  so  as  to  ac- 

1  Part  of  the  opinion  is  omitted. —  Ed. 


432  ADEQUATE    FACILITIES.  [CHAP.    VI. 

quire  the  right  to  construct  a  track  from  the  warehouse  to  the  main 
track  of  the  company,  and  applied  to  the  company  to  connect  the 
same  with  their  road,  and  that  they  would  carry  to,  and  deliver, 
such  grain  as  might  be  consigned  to  it  for  storage,  but  the  com- 
pany had  refused,  and  still  refuse;  that  appellees  have  railroad 
connections  with  a  number  of  other  warehouses  at  which  they  de- 
liver grain,  and  that  this  and  other  companies  running  into  Chicago 
do  not  have  the  necessary  facilities  for  storing  grain,  but  depend 
upon  private  enterprise  for  the  purpose;  that  it  is  the  custom  and 
usage  of  all  such  railroads  to  use  such  connecting  tracks  to  deliver 
grain  at  various  elevators  in  the  city,  and  that  this  road  unlawfully 
discriminates  against  appellants  in  refusing  to  deliver  grain  at 
their  warehouse,  or  in  not  permitting  them  to  form  such  a  connec- 
tion with  their  road  as  would  render  it  easy  and  convenient  to 
thus  deliver  grain. 

It  is  also  averred,  that  such  unlawful  discrimination  is  induced 
by  a  contract  entered  into  by  the  company  with  other  warehouse- 
men, only  to  deliver  grain  transported  over  their  roads  to  the  ware- 
houses of  such  parties. 

It  is  averred,  that  relators  have  no  adequate  remedy  at  law,  and 
it  concludes  with  a  prayer  that  the  railroad  company  be  compelled 
to  permit  them  to  construct  a  track,  connecting  their  warehouse 
with  the  railroad,  by  a  switch,  and  then  to  carry  and  deliver  to 
the«n  all  grain  that  may  be  consigned  to  their  warehouse  for  storage. 

To  this  writ,  appellees  demurred,  and  it  was  sustained  by  the 
court,  and  a  judgment  was  rendered  in  favor  of  the  company.  To 
reverse  the  judgment,  relators  have  brought  the  record  to  this  court 
by  appeal,  and  assign  for  error  the  sustaining  of  the  demurrer  to 
the  writ. 

In  the  case  of  Vincent  v.  Chicago  &  Alton  Railroad  Co.  49  111. 
33,  it  was  held  that :  "  A  railway  company  can,  unquestionably,  re- 
fuse to  allow  the  owners  of  adjacent  property  to  lay  down  a  side- 
track connecting  with  its  own  rails."  Appellants  admit,  that, 
under  the  rules  of  the  common  law,  this  company  could  not  be  com- 
pelled to  permit  appellants  to  unite  their  track  with  that  of  the 
company,  but  they  insist,  that  the  railroads  entering  Chicago,  hav- 
ing established  a  custom  whereby  all  public  warehouses  have  been 
permitted  to  make  such  a  connection,  and  grain  having  been,  by 
them,  delivered  in  bulk  into  such  warehouses,  it  therefore  follows 
that  appellees  can  not  make  a  discrimination  between  the  different 
warehouses. 

The  averments  of  the  writ  do  not  bear  the  construction  that  this 
company  had  permitted  the  owners  of  all  other  elevators  to  thus 
connect  with  their  road;  nor  does  it  appear  that  all  are  so  con- 


ADEQUATE   FACILITIES.  433 

nected.  But  even  had  it  been  averred,  that  all  warehouses  in  the 
city,  except  that  of  appellants,  were  so  connected,  still  there  is  no 
averment  of  the  terms  or  conditions  upon  which  the  connections 
had  been  made.  .'  And  it  certainly  fails  to  appear  that  it  had  been, 
or  was  the  usage,  that  such  warehouses  might  be  thus  brought  in 
connection  with  this  or  other  roads,  without  the  consent  of  the 
companies;  and  in  the  absence  of  such  an  averment,  we  would  not 
presume  such  a  custom  to  exist.,  Even  if  such  an  averment  had 
been  made,  we  are  not  prepared  to  hold  that  such  a  usage,  for  so 
short  a  period,  would  have  acquired  the  force  and  effect  of  a  law,  re- 
pealing or  abrogating  their  common  law  right  to  refuse.  Customs 
that  obtain  the  force  of  laws,  are  not  thus  readily  obtained.  We 
are,  therefore,  clearly  of  opinion,  that  under  the  rules  of  the  com- 
mon law,  or  under  the  custom  averred  in  the  writ,  we  have  n 
power  to  compel  this  connection,  without  the  consent  of  appellees. 


OLANTA  COAL  MINING  CO.  v.   BEECH  CEEEK 
EAILEOAD  CO. 

144  Fed.   150.     1906. 

BuFFiNGTON,  District  Judge.  This  is  a  bill  in  equity  brought 
August  1,  190-4,  by  the  Olanta  Coal  Mining  Company,  a  corpora- 
tion of  the  state  of  Pennsylvania,  in  the  court  of  common  pleas  of 
Clearfield  county,  Pa.,  against  the  Beech  Creek  Eailroad  Company, 
a  corporation  of  the  same  state,  and  its  lessee,  the  N"ew  York  Cen- 
tral &  Hudson  Eiver  Eailroad  Company,  a  corporation  of  the  state 
of  New  York.  The  latter  company  alleged  itself  to  be  the  real 
and  only  party  in  interest,  and  removed  the  case  to  this  court. 

Passing  by  the  many  irrelevant  matters  and  proofs  in  the  vo- 
luminous record,  we  address  ourselves  to  the  gist  of  the  bill,  which, 
in  substance,  is  to  compel  the  railroad  to  permit  switch  connections 
with  its  line  to  enable  complainant  to  ship  its  coal  to  market. 
The  latter  is  a  coal  mining  corporation,  chartered  July  9,  1903, 
and  by  its  charter  is  authorized  to  carry  on  the  business  "  of  mining, 
shipping  and  selling  of  coal  and  the  manufacturing,  shipping  and 
selling  of  coke  and  other  products  of  coal."  Its  mining  property 
of  some  610  acres  contains  approximately  550  acres  of  coal,  in 
which  are  several  different  veins.     The  property  adjoins  the  right 

2  Compare  Farwell  F.  W.  Assn.  v.  Minneapolis,  St.  P.  &  S.  Ste.  M.  Ry. 
Co.   (181)3).  55  Minn.  8. 

See  also  Vincent  v.  Chicago  &  W.  R.  R.  Co.  (1808),  49  111.  3.3,  and  also 
Chicago  &  A.  R.  R.  Co.  v.  Suffern   (1889).  129  111.  274. 

Compare  State  v.  Missouri  P.  Ry.  Co.  (1890),  29  Neb.  550,  and  West  v. 
London  &  N.  W.  Ry.  Co.  (1870),  L.  R.  5  C.  P.  622. 


434  ADEQUATE   FACILITIES.  [CHAP.    VI. 

of  way  of  the  railroad.  It  has  no  other  outlet  for  its  coal  save 
said  road.  The  Beech  Creek  Eailroad  Company  was  chartered 
under  the  provisions  of  the  general  railroad  act  of  Pennsylvania 
of  April  4,  1868,  and  its  supplements.  It  leased  its  property  to 
the  New  York  Central  Eailroad  Company  by  a  long  term  lease. 
It  is  conceded  that  all  its  duties  and  obligations  rest  on  its  lessee, 
the  New  York  Company.  By  virtue  of  the  Constitution  of  Penn- 
sylvania (Article  17,  §  1),  which  provides,  "  All  railroads  and  canals 
shall  be  public  highways,  and  all  railroads  and  canal  companies 
shall  be  common  carriers,"  and  the  general  railroad  law  of  Feb- 
ruary 19,  1849,  which  provides,  "  Upon  the  completion  of  any 
railroad  authorized  as  aforesaid,  the  same  shall  be  esteemed  a  pub- 
lic highway  for  the  convenience  of  passengers  and  the  transporta- 
tion of  freight,"  the  Beech  Creek  Eailroad  is  a  public  highway  and 
is  chargeable  with  the  duties  and  obligations  of  a  common  carrier. 
Such  is  the  view  of  the  highest  courts  of  that  state.  In  Eailroad 
Company  v.  Colwell,  39  Pa.  339,  80  Am.  Dec.  526,  it  is  said : 

"  Though  the  corporation  in  respect  to  its  capital  is  private,  yet 
it  was  created  to  accomplish  objects  in  which  the  public  have  a 
direct  interest,  and  its  authority  to  hold  land  was  conferred  that 
these  objects  might  be  worked  out." 

And  this  accords  with  the  general  federal  view.  "  The  ques- 
tion," says  the  Supreme  Court  of  the  United  States,  in  Cherokee 
Nation  v.  Southern  Kansas  Eailroad  Company,  135  U.  S.  657,  10 
Sup.  Ct.  965,  34  L.  Ed.  295,  "is  no  longer  an  open  one,  as  to 
whether  a  railroad  is  a  public  highway  established  primarily  for 
the  convenience  of  the  people  and  to  subserve  public  ends."  Its 
road  then  being  a  public  highway,  and  it  a  common  carrier,  its  duty, 
generally  stated,  is  to  receive  from  any  person  for  carriage  and 
transportation  such  freight  as  the  carrier  holds  itself  out  as  willing 
to  carry  and  the  party  sending  offers  to  pay  freight  upon.  New 
Jersey  Steam  Navigation  Company  v.  Merchants'  Bank,  6  How. 
344,  12  L.  Ed.  465;  Southern  Express  Company  v.  St.  Louis,  5 
Myer's  Fed.  Decisions,  §  1511.  Now  in  mining,  coal  is  carried 
from  the  mines  in  small  cars  and  delivered  to  and  carried  by  rail- 
road companies  in  car  load  lots.  To  do  this  requires  sidings  on 
which  the  railroad's  cars  may  be  conveniently  handled  and  filled. 
Such  a  connection  the  complainant  asks,  and  is  willing  to  bear  the 
expense  of  making.  Wliatever  may  be  the  rights  of  shippers  and  the 
obligations  of  railroads  in  other  jurisdictions,  the  general  right  of 
the  adjoining  property  holders  in  Pennsjdvania  to  such  connection 
with  a  railroad  chartered  by  that  state  has  been  decided  by  the  high- 
est court  of  that  state  in  the  case  of  the  Pittsburgh  &  Lake  Erie 
Eailroad  Company  v.  Eobinson,  95  Pa.  428.     There  Eobinson  was 


ADEQUATE    FACILITIES.  435 

the  owner  of  a  manufacturing  site  adjoining  the  railroad,  and  the 
question  was  the  value  of  the  land  which  the  railroad  was  con- 
demning in  part.  It  was  held  that  the  propert}^  owner  had  a  right 
to  switch  connection  with  the  railroad,  and  that  this  right  was  an 
element  in  determining  the  value  of  his  land  and  the  proposition 
"  that  the  defendant  company  is  a  common  carrier,  that  its  railroad 
is  a  public  highway,  that  the  plaintiffs  have  a  right  in  law  to  con- 
struct on  their  land,  adjoining  said  railroad,  a  suitable  switch  for 
the  uses  of  their  business,  and  connect  the  same  with  the  tracks  of 
the  defendant  company,  subject  to  the  general  rules  of  said  com- 
pany regulating  such  connections,  and  that  the  defendant  com- 
pany is  bound  to  receive  and  deliver  to  and  from  such  switch  or 
siding,  cars  and  freight  for  the  said  plaintiffs  to  and  from  such 
points,  on  the  line  of  defendant's  railroad,  as  may  be  designated  by 
plaintiffs,  and  on  equal  terms  with  all  other  individuals  or  trans- 
portation companies,"  was  held  a  proper  definition  of  his  rights 
in  that  regard.     In  considering  this  proposition,  the  court  said : 

."We  are  also  of  opinion  that  the  plaintiff's  third  point  should 
have  been  affirmed.  It  is  conceded  that,  under  our  acts  of  As- 
sembly, the  owner  of  mills  and  manufactories  may  of  right  con- 
nect their  private  sidings  with  the  railroads  of  their  vicinit}',  and 
though,  as  the  counsel  for  the  defendant  in  error  says,  it  does  not 
follow  that  such  owners  may  ever  avail  themselves  of  such  right, 
nevertheless,  the  fact  that  such  a  right  exists  in  them  may  largely 
advance  the  market  value  of  their  several  properties.  Certainly 
privileges  which  may  be  used  to  facilitate  transportation  to  and 
from  large  factories  must  have  some  effect  upon  their  values." 

Under  this  construction  thus  placed  upon  its  own  laws  by  the 
court  of  highest  resort  of  Pennsylvania,  the  right  of  a  mine  operator 
to  proper  and  reasonable  switch  connections  is  clear,  unless  there 
is  something  in  the  facts  and  circumstances  of  the  particular  case 
warranting  a  refusal  of  this  right.  We  find  none  here.  The  com- 
plainant offers  to  bear  the  entire  expense  of  the  connection  and  sid- 
ing. It  is  willing  that  the  connection  be  made  in  the  mode  and  at 
the  point  the  respondent  prefers.  We  are  not  impressed  with  the 
contention  of  the  respondent  that  there  are  engineering  difficulties 
in  locating  a  switch  to  reach  a  siding  for  the  complainant.  No 
such  question  was  raised  during  the  many  interviews  between  these 
parties  prior  to  the  refusal  of  ^the  railroad  company  to  grant  a 
switch  connection.  The  answer  to  the  bill  by  the  New  York  Cen- 
tral Railroad  Company  avers  no  such  difficulties.  On  the  contrary, 
the  answer  admitted  "  that  it  is  abundantly  able  to  grant  the  siding 
and  the  track  connections  with  its  road  and  has  granted  unto  Irish 
Bros.,  miners  and  shippers  of  coal,  a  siding  or  track  connection,  and 


436  ADEQUATE    FACILITIES.  [CHAP.    VI. 

has  also  granted  and  constructed  other  sidings  and  switching  con- 
nections for  other  lessees  of  coal  and  operators  along  the  line  of  the 
Pennsylvania  Division  of  the  New  York  Central  &  Hudson  River 
Eailroad,  meaning  thereby  the  Beech  Creek  Railroad."  It  was  not 
until  a  year  after  the  answer  was  filed  that  the  question  of  engineer- 
ing difficulties  was  raised  by  an  amendment  then  made.  Under 
the  proceedings  and  proofs,  we  are  of  opinion,  and  so  find,  that 
the  respondent  has  failed  to  show  the  existence  of  any  engineering 
difficulties,  hazards,  or  operating  difficulties,  which  make  it  unrea- 
sonable, unwise,  or  inequitable  for  a  chancellor  to  grant  the  prayer 
of  this  bill. 

The  second  contention  of  the  railroad  is  that  the  coal  carried  by 
the  Beech  Creek  Road  has  gained  a  high  reputation  in  the  market, 
which  has  inured  to  the  benefit  of  the  road  as  a  coal  carrier  and 
increased  its  trade ;  that  the  complainant's  coal  is  of  an  inferior 
character,  and  its  introduction  into  the  market  would  injuriously 
affect  the  reputation  of  the  coal  market  from  that  section,  and  so 
injure  and  decrease  the  carrying  business  of  the  road.  We  have 
been  cited  to  no  power  or  right  vested  in  a  common  carrier  to  thus 
refuse  to  transport  freight  of  the  general  class  it  is  carrying  because 
of  the  inferiority  of  the  particular  lot  in  question.  The  all-suffi- 
cient answer  to  a  claim  on  the  part  of  a  common  carrier  to  exercise 
such  a  power  is  simply  that  it  does  not  exist,  and  the  proofs  in  this 
case  do  not  satisfy  us  that,  if  it  did,  the  respondent  has  shown  by 
the  weight  of  the  proof  that  its  contention  as  to  the  character  of 
complainant's  coal  is  established,  or  that  any  such  damage  as  is  here 
averred  to  its  business  as  a  common  carrier  would  ensue. 

Let  a  decree  be  submitted  for  approval  and  signing.^ 


NORTHERN    PACIFIC    RAILWAY    CO.    v.    RAILROAD 
COMMISSION  OF  WASHINGTON. 

58  Wash.  360.     1910.^ 

GosE,  J.  This  appeal  is  prosecuted  from  a  judgment  of  the 
superior  court  of  Pierce  county,  affirming  an  order  of  the  Railroad 
Commission  requiring  the  appellant  to  construct  and  operate  a 
spur  track  from  its  main  line  road  to  the  sawmill  of  one  H.  A. 
Burnham.  The  appellant  owns  and  operates  a  line  of  railroad, 
extending  from  Tacoma  easterly   and   southeasterly   through   the 

1  See  State  v.  White  Oak  Ry.  Co.   (1909),  65  W.  Va.  15. 
Compare  Butchers  &  D.  S.  Y.  Co.  v.  Louisville  &  N.  R.  R.  Co.   (1895), 
67  Fed.  35. 

1  The  arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 


ADEQUATE    FACILITIES.  437 

state  and  southerly  through  Eainier  and  Mcintosh  to  the  Columbia 
river.  Eainier  and  Mcintosh  are  stations  about  four  miles  apart. 
Mr.  Burnham  owns  and  operates  a  sawmill  about  midway  between 
the  stations  and  about  300  feet  from  the  appellant's  main-line 
track.  He  manufactures  about  6  car  loads  per  week  of  lumber 
and  other  sawed  timbers,  for  shipment  over  appellant's  lines  of 
road,  and  hauls  it  by  means  of  wagons  and  teams  to  Eainier,  a 
distance  of  about  3i/^  miles  by  wagon  road,  at  an  expense  of  about 
$40  a  car  load  for  hauling  and  loading.  With  a  spur  track  to 
his  mill,  he  could  put  his  products  aboard  the  car  for  about  $5 
per  car  load.  He  has  demanded  of  the  appellant  that  it  furnish 
him  with  a  spur  track  to  the  mill,  has  offered  to  furnish  a  right 
of  way  for  the  track,  grade  the  track  and  furnish  and  lay  the 
ties  under  the  direction  of  the  appellant;  but  it  has  refused  to 
comply  with  his  demand.  Upon  a  complaint  alleging  these  facts, 
and  also  alleging  that  a  spur  track  can  be  constructed  at  small 
expense  to  the  appellant,  extending  from  the  main  line  of  its  road 
to  the  mill,  without  endangering  or  rendering  difficult  the  opera- 
tion of  trains,  the  case  was  heard  before  the  Eailroad  Commission. 
The  commission  found  the  facts  stated,  and  that  a  necessity  exists 
for  the  spur  track.  Thereafter  it  entered  an  order  requiring  Burn- 
ham  to  construct  the  grade  and  furnish  proper  and  necessary  ties, 
and  requiring  appellant  to  furnish  and  lay  the  rails,  construct  the 
spur  track,  provide  proper  connections  with  its  main  line,  and  fur- 
nish Burnham  wdth  cars  and  facilities  for  loading  his  lumber  at 
his  mill  for  shipment  over  the  appellant's  lines.  The  order  makes 
no  provision  for  a  right  of  way,  and  the  evidence  does  not  disclose 
who  owns  the  land  over  which  the  spur  track  is  to  be  constructed. 
A  compliance  with  the  order  would  require  switching  to  the  extent 
of  about  a  mile,  and  would  consume  from  a  quarter  to  a  half  hour 
every  time  a  car  was  taken  to  or  from  the  mill. 

^,The  appellant  contends  that  the  order  is  a  taking  of  its  prop- 
erty without  due  process  of  law,  and  that  it  contravenes  the  four- 
teenth article  of  amendment  to  the  federal  Constitution.  We 
think  this  view  must  prevail.  The  sawmill  is  a  private  industry, 
and  the  effect  of  the  order  is  to  take  the  private  property  of  the 
appellant  and  devote  it  to  the  private  use  of  Burnham.  Healy 
Lumber  Co.  v.  Morris,  33  Wash.  490,  74  Pac.  681,  63  L.  E.  A.  820, 
99  Am.  St.  Eep.  964.  A  railroad  is  a  public  highway  and,  as 
such,  is  subject  to  regulation ;  but  the  regulation  must  be  promo- 
tive of  the  public  interest.  Notwithstanding  the  fact  that  it  is  a 
public  highway,  its  property  is  private.  (  In  Missouri  Pacific  Eail- 
way  Co.  V.  Humes,  115  U.  S.  512,  6  Stip.  Ct.  110,  29  L.  Ed.  463, 
speaking  of  the  fourteenth  amendment,  it  is  said :     "  It  would  be 


438  ADEQUATE    FACILITIES.  [CHAP.    VI. 

difficult  and  perhaps  impossible  to  give  to  those  words  a  definition, 
at  once  accurate,  and  broad  enough  to  cover  every  case.  The 
difficulty,  and  perhaps  impossibility  was  referred  to  by  Mr.  Justice 
Miller,  in  Davidson  v.  New  Orleans,  96  U.  S.  97  [24  L.  Ed.  616], 
where  the  opinion  was  expressed  that  it  is  wiser  to  ascertain  their 
intent  and  application  by  the  'gradual  process  of  judicial  inclusion 
and  exclusion,  as  the  cases  presented  for  decision  shall  require, 
with  the  reasoning  on  which  such  decisions  may  be  founded.' "  It 
is  true  that  railroad  companies  may  be  required  to  fence  their 
tracks,  establish  proper  crossings  at  points  of  intersection  with 
public  roads,  patrol  their  tracks  at  thickly  populated  points,  estab- 
lish depots  and  stations,  provide  suitable  connection  with  intersect- 
ing lines,  adopt  suitable  safety  appliances  for  the  coupling  of  cars, 
properly  light  and  heat  their  cars  and  depots,  and  many  other 
things  which  touch  the  public  business.  The  sawmill  of  Mr. 
Burnham,  while  an  important  industry,  is  no  more  a  public  busi- 
ness than  a  flouring  mill,  a  dairy,  a  farm,  a  livery  barn,  or  a 
manufacturing  plant  of  any  other  character  or  description. 

In  Missouri  Pacific  Eailway  Co.  v.  Nebraska,  217  U.  S.  196,  de- 
cided by  the  United  States  Supreme  Court  since  the  case  at  bar  was 
argued,  a  statute  providing  that :  "  Every  railroad  company  or  cor- 
poration operating  a  railroad  in  the  state  of  Nebraska  shall  afford 
equal  facilities  to  all  persons  or  associations  who  desire  to  erect  or 
operate,  or  who  are  engaged  in  operating  grain  elevators,  or  in 
handling  or  shipping  grain  at  or  contiguous  to  any  station  of  its 
road,  and  where  an  application  has  been  made  in  writing  for  a  loca- 
tion or  site  for  the  building  or  construction  of  an  elevator  -or  eleva- 
tors on  the  railroad  right  of  way  and  the  same  not  having  been 
granted  within  a  limit  of  sixty  days,  the  said  railroad  company  to 
whom  application  has  been  made,  shall  erect,  equip  and  maintain  a 
side  track  or  switch  of  suitable  length  to  approach  as  near  as  four 
feet  of  the  outer  edge  of  their  right  of  way  when  necessary  and  in  all 
cases  to  approach  as  near  as  necessary  to  approach  an  elevator  that 
may  be  erected  by  the  applicant  or  applicants  adjacent  to  their 
right  of  way  for  the  purpose  of  loading  grain  into  cars  from  said 
elevator,  and  for  handling  and  shipping  grain  to  all  persons  or 
associations  so  erecting  or  operating  such  elevators,  or  handling  and 
shipping  grain,  without  favoritism  or  discrimination  in  any  re- 
spect whatever.  Provided,  however,  that  any  elevator  hereafter 
constructed,  in  order  to  receive  the  benefits  of  this  act,  must  have 
a  capacity  of  not  less  than  fifteen  thousand  bushels  " —  and  mak- 
ing railroads  liable  for  a  fine  for  failure  to  obey  the  command  of 
the  statute,  was  held  unconstitutional.  The  case  arose  out  of  two 
suits  based  upon  the  statute.     The  first  was  brought  by  the  state 


ADEQUATE    FACILITIES.  439 

of  Nebraska  to  recover  a  fine  of  $500.  The  second  was  brought 
on  the  relation  of  the  interested  party,  to  compel  the  extension 
of  a  side  track  and  the  granting  of  shipping  facilities ;  the  railroad 
company  having  refused  an  application  for  a  site  for  an  elevator 
on  its  right  of  way.  State  v.  Missouri  Pacific  Eailway  Co.,  81  Neb. 
15,  115  N.  W.  614,  and  Farmers'  Elevator  Co.  v.  Same,  81  Neb. 
174,  115  N.  W.  757,  were  reversed;  the  court  saying:  "We  are 
of  the  opinion  that  this  statute  is  unconstitutional  in  its  applica- 
tion to  the  present  cases,  because  it  does  not  provide  indemnity 
for  what  it  requires."  The  same  principle  is  announced  in  Chicago, 
B.  &  Q.  R.  Co.  V.  State,  50  Neb.  399,  69  N.  W.  955,  and  State  v. 
Chicago,  Milwaukee  &  St.  Paul  Ey.  Co.  36  Minn.  402,  31  N.  W. 
365. 

ffiowever  desirable  it  may  be  for  Mr.  Burnham  and  others  en- 
gaged in  a  like  business  to  have  switches  and  sidings  extended  to 
their  mills,  the  fourteenth  amendment  to  the  federal  Constitution, 
as  construed  by  the  highest  federal  court  and  by  this  court  as  well, 
presents  an  insuperable  barrier  against  compelling  such  accommo- 
dationsj 

The  contention  of  the  Attorney  General  that  the  order  is  pro- 
motive of  the  public  convenience,  and  within  the  recognized  police 
power  of  the  state,  cannot  be  upheld.  We  are  persuaded,  upon  both 
principle  and  authority,  that  the  Burnham  mill  is  a  private  busi- 
ness, and  that  an  order  requiring  the  railroad  company  to  extend 
a  switch  or  spur  track  beyond  its  right  of  way  to  afford  him  bet- 
ter and  cheaper  shipping  facilities  is,  in  substance  and  effect,  re- 
quiring the  company  to  devote  its  property  to  the  private  use  of 
another,  and  is  within  the  protective  clause  of  the  federal  Consti- 
tution. 

The  judgment  is  reserved,  with  directions  to  dismiss  the  petition. 

EuDKiN,  C.  J.,  and  Chadwick  and  Morris,  JJ.,  concur. 

FuLLERTON,  J.  Since  the  Supreme  Court  of  the  United  States 
holds  that  a  railroad  company  cannot  be  compelled  without  com- 
pensation to  afford  facilities  to  a  private  shipper  other  than  it  offers 
at  its  general  public  stations,  I  am  constrained  to  concur  in  the 
judgment  the  majority  have  directed  to  be  entered  in  this  case.  I 
cannot  concur,  however,  in  all  that  is  said  in  the  opinion.  I  can- 
not concur  in  the  view  that  to  compel  a  railway  company  to  stop 
at  points  other  than  its  public  stations  and  take  on  for  carriage 
the  property  of  a  private  shipper  is  taking  its  property  for  the 
private  use  of  another  in  violation  of  the  due  process  of  law  clauses 
in  the  state  and  federal  Constitutions.  As  I  understand  it,  the 
principal  purpose  for  which  a  railroad  is  constructed  is  to  carry 
from  one  point  to  another  the  private  property  of  the  individual; 


440  ADEQUATE    FACILITIES.  [CHAP.    VI. 

that  it  IS  for  this  purpose  it  has  its  existence  and  is  given  the  vast 
powers  and  rights  it  possesses.  This  function,  then,  the  state  may 
compel  it  to  fulfill.  If,  therefore,  its  public  stations  do  not  afford 
an  adequate  facility  for  the  shipment  of  the  property  of  a  par- 
ticular individual,  I  know  of  no  legal  reason  why  the  company 
cannot  be  compelled,  on  due  compensation,  to  furnish  that  par- 
ticular individual  with  additional  facilities,  even  to  the  extent  of 
putting  in  an  additional  side  track  for  him.  For  this  reason  I 
dissent  from  the  holding  that  to  do  so  is  to  take  private  property  for 
a  private  use.^ 


WINTEES    METALLIC    PAINT    CO.    v.    CHICAGO, 
MILWAUKEE  AND  ST.  PAUL  EAILWAY  CO. 

16  I.  C.  C.  587.     1909.^ 

Clements,  Commissioner. 

In  case  No.  1601,  besides  challenging  the  reasonableness  of  the 
rates  on  ground  iron  ore  from  Iron  Ridge  to  various  destinations, 
complainant  prays  that  the  Commission  order  the  construction  and 
maintenance  of  a  private  side  track  from  the  main  line  of  the  St. 
Paul  road  to  its  mills,  a  distance  of  425  feet  over  the  property  of 
the  Illinois  Steel  Company  and  a  public  highway.  At  the  hearing 
complainant's  witness  stated  that  his  company  would  not  under- 
take to  build  or  to  defray  any  part  of  the  expense  incident  to  the 
construction  of  this  siding. 

By  section  1  of  the  amended  act  to  regulate  commerce  the  Com- 
mission is  authorized  to  order  the  construction  and  maintenance, 
upon  reasonable  terms,  of  "  a  switch  connection  "  with  any  lateral 
branch  line  of  railroad,  or  "  private  side  track  wliich  rnatj  be  con- 
structed to  connect  with  its  railroad,  where  such  connection  is  rea- 
sonably practicable  and  can  be  put  in  with  safety  and  will  furnish 
sufficient  business  to  justify  the  construction  and  maintenance  of 
the  same."  ;From  the  language  of  this  section  it  is  clear  that  the 
Commission  has  no  authority  to  order  the  construction  of  a  private 
side  track  by  a  railroad  company,  but  that  its  authority  is  limited 
to  ordering  a  carrier  to  make  "  a  switch  connection  "  with  a  pri- 
vate side  track.  Certainly  our  authority  does  not  embrace  the 
power  to  order  a  carrier  to  construct  and  maintain  a  side  track 
off  its  right  of  way  and  without  direct  contribution  by  the  shipper 
to  the  expense  incident  thereto.  ] 

2  Compare  Corporation  Commission  v.  Railroad  — "  Industrial  Siding 
Case"    (1905),  140  N.  C.  239. 

1  Only  one  point  from  the  opinion  is  here  reprinted. —  Ed. 


ADEQUATE    FACILITIES.  441 

DUNN  V.   WESTERN  UNION  TELEGRAPH  CO. 

2  Ga.  App.  845.     1907.^ 

Powell,  J.  The  grave  question  remaining  in  the  case  is  whether 
the  petition  sets  forth  a  cause  of  action  against  the  telegraph  com- 
pany. The  gist  of  the  action  is  not  the  failure  or  refusal  of  the 
telegraph  company  to  transmit  a  message  tendered  to  it,  but  the 
alleged  disrespectful,  humiliating,  and  insulting  treatment  by  its 
agent  of  a  member  of  the  general  public,  lawfully  in  its  office  on 
business  with  the  company.  The  contention  is  that  the  entire 
damage  alleged  is  such  as  affects  only  the  feelings  of  the  plaintiff, 
and  that  damages  for  mental  suffering  cannot  be  recovered,  unless 
there  is  a  concomitant  injury  to  person  or  purse.  The  further  con- 
tention is  made  that  no  breach  of  duty  to  the  plaintiff'  is  shown. 
We  will  dispose  of  these  contentions  in  inverse  order. 

A  telegraph  company  is  a  private  corporation  performing  a  pub- 
lic duty;  and  whether  it  is  a  common  carrier,  a  bailee,  or  a  person 
engaged  in  business  sui  generis,  is  immaterial.  It  is  a  public- 
service  company,  one  engaged  in  a  business  of  such  nature  as  to 
clearly  distinguish  it  from  those  purely  private  persons  and  cor- 
porations who  may  conduct  their  own  business  in  their  own  way. 
All  such  corporations,  on  account  of  the  interest  which  the  public 
has  in  the  manner  in  which  their  business  is  conducted,  as  well  as 
on  account  of  the  special  franchises  enjoyed  by  them,  must  ob- 
serve certain  rules  of  dealing  with  the  public.  These  rules,  and  the 
corresponding  duties  which  are  implied  from  the  nature  of  the  call- 
ing, are  not  always  declared  by  specific  statute,  but  are  frequently 
enforced  by  the  courts  as  a  part  of  the  general  law  or  of  the  com- 
mon law.  "  Upon  each  person,  in  every  position  he  occupies,  pe- 
culiar duties  are  imposed,  each  demanding  its  discharge  with  an 
emphasis  accentuated  or  modified  by  the  attendant  circumstances." 
Ray,  Negligence  of  Imposed  Duties,  Personal,  §  1,  ''  One  of  the 
great  requirements  which  the  government  demands  of  every  in- 
stitution impressed  with  a  public  interest,  and  one  which  is  thrown 
over  every  citizen  as  a  great  and  protective  shield,  is  the  duty  to 
act  impartially  with  alL  They  are  under  obligations  to  extend 
their  facilities  to  all  persons,  on  equal  terms,  who  are  willing  to 
comply  with  their  reasonable  regulations,  and  to  make  such  com- 
pensation as  is  exacted  from  others  in  like  circumstances."  Jones, 
Telegraph  and  Telephone  Companies,   §   236. 

From  this  principle,  universally  recognized,  springs  the  corollary 

1  Part  of  the  opinion  is  omitted. —  Ed. 


442  ADEQUATE   FACILITIES.  [CHAP.    VI. 

that  all  such  persons,  natural  and  artificial,  shall  afford  to  such 
members  of  the  public  as  have  occasion  to  transact  with  them 
business  of  the  nature  they  are  holding  themselves  out  as  being 
accustomed  to  do,  safe  and  decent  access  to  the  places  opened  up 
for  the  transaction  of  the  business  in  question.  This  safety  does 
not  mean  mere  physical  safety,  nor  this  decency  mere  absence  of 
obscenity;  but  by  the  employment  of  tlie  expression  ^safe  and 
decent  access  "  it  is  intended  to  connote  also  the  notion  of  freedom 
from  abuse,  humiliation,  insult,  and  other  unbecoming  and  dis- 
respectful treatment.) /a  member  of  the  public  is  not  to  be  deterred 
from  transacting  or  offering  to  transact  the  business  which  the 
law  compels  a  telegraph  company  to  accept  impartially  from  every 
person  by  reason  of  the  fact  that  he  cannot  enter  the  public 
office  without  being  subjected  to  insult  or  personal  affront.)  A  vio- 
lation of  this  duty  has  occurred  whenever  a  person  entering  the 
telegraph  office  for  the  purpose  of  sending  a  message  has  been  met 
with  disrespectful  or  insulting  treatment  at  the  hands  of  the  com- 
pany's agents.  It  is  immaterial  that  the  person  thus  injured  had 
no  personal  interest  in  the  message,  or  that  he  was  the  mere 
agent  of  another ;  for  there  is  no  such  requirement  as  that  persons 
desiring  to  transact  business  with  public  utility  corporations  shall 
do  so  in  person.  The  fact  that  the  right  of  respectful  treatment, 
while  attempting  to  do  business  with  a  public  service  company, 
follow^s  as  the  natural  sequence  from  the  right  to  be  served  impar- 
tially and  at  all  reasonable  times,  seems  to  render  the  citation  of 
authority  as  to  the  existence  of  this  right  of  respectful  treatment 
unnecessary.  We  do,  however,  call  attention  to  the  Georgia  cases 
of  Gasway  v.  Atlanta  &  West  Point  E.  Co.,  58  Ga.  216,  221,  and 
Georgia  E.  Co.  v.  Eichmond,  98  Ga.  495,  502,  25  S.  E.  5G5.  It  will 
be  noted  that,  while  these  were  actions  against  carriers,  in  neither 
case  did  the  liability  depend  upon  the  fact  that  the  plaintiff  was 
a  passenger.  In  Gasway's  case  he  was  attempting  to  check  bag- 
gage as  agent  for  his  wife.  In  Eichmond's  case  he  had  called  at 
the  passenger  station  to  see  about  certain  trunks,  and  the  court 
in  deciding  the  case,  took  pains  to  call  attention  to  the  fact  that 
the  relation  of  carrier  and  passenger  did  not  exist  at  that  time. 
We  might  multiply  citation  of  precedents,  but  these  are  sufficient. 
iThe  telegraph  company,  therefore,  violated  its  duty  towards 
the  plaintiff,  in  that  it  did  not  afford  him  safe  and  decent  access 
to  its  office.  The  plaintiff  suffered  the  injury  of  humiliation  and 
wounded  feelings.'  Is  it  a  case  of  damnum  absque  injuria,  because 
no  injury  to  purse  or  person  also  ensued?  That  damages  for 
mental  suffering  are  compensatory  in  character  can  hardly  be  open 
to  question.     "  Wounding  a  man's  feelings  is  as  much  actual  dam- 


ADEQUATE   FACILITIES.  443 

age  as  breaking  his  limbs.  The  difference  is  that  one  is  internal 
and  the  other  external ;  the  one  mental,  the  other  physical."  Head 
V.  Ga.  Pac.  E.  Co.,  79  Ga.  358,  3G0,  7  S.  E.  217,  218,  11  Am.  St. 
Eep.  434 ;  Smith  v.  Overby,  30  Ga.  241,  248.  Such  damages  may 
in  the  very  nature  of  things  be  just  as  proximately  and  naturally 
the  consequence  of  the  defendant's  wrong  as  any  other  damage; 
so  that  there  is  no  legitimate  objection  to  their  allowance  for  any 
lack  of  this  element.  Of  course,  there  may  be  cases  where  mental 
suffering  is  not  a  proximate  and  natural  result  of  an  injury;  but 
this  is  true  as  to  any  other  form  of  damage.  Nor  can  it  be  justly 
said  that  an  allowance  for  mental  suffering  is  any  more  specula- 
tive or  conjectural  than  damages  for  physical  pain  and  suffering. 
Those  cases  which  preclude  recovery  of  damages  for  mental  suffer- 
ing, when  no  other  injury  is  shown,  cannot  fairly  rest  on  any  of 
these  grounds,  but  must  be  based  upon  the  theory  presented  by 
Allen,  J.,  in  the  case  of  Spade  v.  Lynn,  etc.,  E.  168  Mass.  285, 
47  N.  E.  88,  38  L.  E.  A.  512,  60  Am.  St.  Eep.  393,  that  the 
rule  is  purely  arbitrary,  though  actually  existent  in  certain  classes 
of  cases.  See,  also,  Homans  v.  Boston  Elevated  Ey.  Co.,  180  Mass. 
456,  62  N".  E.  737,  57  L.  E.  A.  291,  91  Am.  St.  Eep.  324,  wherein 
the  court,  through  Holmes,  J.,  says  that  the  rule,  being  arbitrary, 
is  not  to  be  extended. 

This  arbitrary  rule  is  generally  applied  only  to  those  cases  where 
the  injury  is  the  result  of  mere  neglect.  The  leading  case  of  Chap- 
man V.  Western  Union  Tel.  Co.,  88  Ga.  763,  15  S.  E.  901,  17  L.  E. 
A.  430,  30  Am.  St.  Eep.  183,  as  well  as  the  cases  which  have  fol- 
lowed it,  puts  this  state  in  line  with  those  that  hold  that,  in  actions 
on  account  of  wrongs  merely  negligent,  mental  suffering  unac- 
companied by  other  injury  cannot  be  the  basis  of  a  recovery. 
Those  courts,  however,  who  assert  this  doctrine  even  most  strenu- 
ously, do  not  extend  its  application  to  those  intentional  injuries  of 
which  insult,  humiliation,  and  mental  suffering  are  the  natural 
consequences.  As  Allen,  J.,  in  the  Spade  case,  supra,  says :  "  It 
is  hardly  necessary  to  add  that  this  decision  does  not  reach  those 
classes  of  actions  where  an  intention  to  cause  mental  distress  or  to 
hurt  the  feelings  is  shown  or  is  reasonably  to  be  inferred."  By 
this  distinction  there  can  be  seen  between  the  case  of  Chapman  v. 
Telegraph  Company,  supra,  and  that  of  Cole  v.  Eailway  Company, 
102  Ga.  474,  31  S.  E.  107,  a  clear,  logical  discrimination.  The 
holding  in  the  Cole  case  is  undoubtedly  the  law,  and  is  un- 
equivocally supported  by  authority.  There  a  railway  conductor 
intentionally  and  wantonly  insulted  a  passenger,  not  by  using  slan- 
derous language  to  him,  as  the  court  intimates  in  the  opinion  (for 
the  language  was  not  per  se  slanderous,  and  there  was  no  allega- 


444  ADEQUATE   FACILITIES.  [CHAP.    VI. 

tions  stating  it  to  be  so  for  any  special  reason),  but  by  using  to 
him  insulting  and  humiliating  language.  The  whole  injury  was  to 
the  plaintiff's  feelings.  The  court  says  that  case  is  distinguish- 
able from  the  Chapman  case;  and  it  is,  not  because  the  plaintiif  in 
the  Cole  case  was  slandered,  but  because  that  was  an  action  upon 
a  malicious  and  intentional  tort,  the  other  upon  a  merely  negli- 
gent, though  wrongful,  omission.  See  Watson  on  Damages,  §  399 ; 
Burdick,  Law  of  Torts,  101;  Wilkinson  v.  Downtown,  [1897]  3 
Q,  B.  57  (wherein  a  recovery  was  upheld  in  favor  of  a  wife  for 
mental  shock  on  account  of  defendant's  falsely  and  maliciously 
telling  her  that  her  husband  had  been  seriously  wounded)  ;  Eice 
V.  Eice,  104  Mich.  371,  62  N.  W.  833  (where  a  recovery  by  a  wife 
for  mental  suffering  occasioned  by  the  alienation  of  her  husband's 
affections  was  held  proper,  though  no  financial  loss  in  the  matter 
of  support  was  shown).  See,  also,  Barbee  v.  Eeese,  60  Miss.  906; 
Conklin  v.  Thompson,  29  Barb.  (N.  Y.)  218. 


A 


CHAPTER  VII 
WITHDRAWAL  FROM  PUBLIC  SERVICE. 

ANONYMOUS. 

Godbolt,  345.     1623.^ 

If  an  Inn-keeper  taketh  down  his  Signe,  and  yet  keepeth  a  hos- 
terie,  an  Action  upon  the  Case  will  lie  against  him,  if  he  do  deny 
lodging  unto  a  travailer  for  his  money ;  but  if  he  taketh  down  his 
Signe,  and  giveth  over  the  keeping  of  an  Inn,  then  he  is  discharged 
from  giving  lodging. 


SATTEELEE  v.  GEOAT. 
1  Wend.  272.     1828.^ 

By  the  Court,  Sutherland,  J.  The  defendant  was  a  common 
carrier  between  Schenectady  and  Albany,  previous  to  1819.  He 
then  sold  out  all  his  teams  but  one,  which  he  kept  for  agricultural 
purposes  on  his  farm.  One  witness,  however,  testified,  that  de- 
fendant employed  his  team  in  the  carrying  and  forwarding  busi- 
ness, as  occasions  ofEered,  until  1822  or  1823.  But  subsequent  to 
that  period,  there  is  no  evidence  whatever  of  his  carrying  or  for- 
warding a  single  load,  until  April,  1824,  when  one  John  Dows 
applied  to  him,  very  urgently,  to  bring  some  loads  for  him  from 
Albany  to  Schenectady,  to  which  the  defendant  reluctantly  con- 
sented, and  despatched  one  Asia  with  his  team  for  the  purpose, 
with  special  instructions  to  bring  nothing  for  any  other  person ;  if 
Dows'  goods  were  not  ready,  to  come  back  empty.  He  brought 
two  loads  and  returned  for  a  third,  under  the  same  instructions, 
repeated  again  and  again;  but  Dows'  third  load  not  being  ready, 
instead  of  returning  empty  as  he  was  directed  to  do,  he  applied 
to  the  plaintiffs  for  a  load,  which  they  furnished  him,  to  be  car- 
ried to  Frankfort,  in  Herkimer  county.  He  arrived  at  Schenectady 
late  at  night.  The  next  morning  it  was  discovered  that  one  of 
the  boxes  had  been  broken  open,  and  a  part  of  the  goods  stolen. 

1  Only  an  extract  from  the  case  is  here  reprinted. —  Ed. 
1  The  statement  of  the  case  is  omitted. —  Ed. 


446  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII. 

The  defendant  disavowed  all  responsibility  for  the  goods,  before  it 
was  discovered  that  any  of  them  had  been  taken,  and  declared  that 
Asia  had  violated  his  express  instructions  in  bringing  them.  Asia 
was  subsequently  convicted  of  the  theft,  and  sent  to  the  state  prison. 
The  defendant  gave  immediate  notice  to  the  plaintiffs  of  all  the 
facts,  and  that  he  did  not  hold  himself  responsible  for  the  goods. 

The  judge  charged  the  jury,  that  if  the  defendant  was  respon- 
sible ,at  all,  it  was  either  on  the  general  liability  of  a  common  car- 
rier, and  that  depended  upon  the  fact,  whether  he  was,  at  the  time, 
a  common  carrier  or  not;  or  upon  a  special  contract  for  carrying 
the  goods.  That  it  was  for  the  jury  to  determine,  whether  the 
defendant  was,  at  the  time,  acting  in  the  capacity  of  a  common 
carrier;  and  if  they  believed  that  the  teamster  had  been  specially 
employed  by  the  defendant,  for  a  particular  purpose  and  object, 
then  he  could  not  bind  the  defendant  by  a  contract  beyond  his 
special  employment.     The  jury  found  for  the  defendant. 

The  law  was  correctly  laid  down  by  the  judge.  The  defendant 
stood  upon  the  same  footing,  as  though  he  had  never  been  engaged 
in  the  forwarding  business.  He  had  abandoned  it  entirely  cer- 
tainly one  year,  and  according  to  the  weight  of  evidence,  four  years 
previous  to  this  transaction.  He  makes  a  special  contract  with 
Dows  to  bring  goods  for  him  from  Albany,  and  gives  his  teamster 
express  instructions  to  bring  goods  for  no  one  else.  He  was  acting 
under  a  special  contract,  and  not  in  the  capacity  of  a  common  car- 
rier. Is  he  then  responsible  for  the  act  of  his  servant,  done  in 
violation  of  his  instructions,  and  not  in  the  ordinary  course  of  the 
business  in  which  he  was  employed?  If  a  farmer  send  his  servant 
with  a  load  of  wheat  to  market,  and  he,  without  any  instructions 
from  his  master,  applies  to  a  merchant  for  a  return  load,  and  ab- 
sconds with  it,  is  the  master  responsible?  Most  clearly  not.  It 
was  an  act  beyond  the  scope  of  the  general  authority  of  the  servant, 
quoad  hoc,  therefore  he  acted  for  himself  and  on  his  own  responsi- 
bility, and  not  for  his  employer. 

The  verdict  is  according  to  tlie  weight  of  evidence.  There  is 
nothing  in  the  ground  of  surprise;  if  there  was,  it  should  have 
been  the  subject  of  a  special  motion. 

Motion  for  new  trial  denied.^ 

2  "  Property  does  become  clothed  with  a  public  interest  when  used  in  a 
manner  to  make  it  of  public  consequence,  and  affect  the  community  at  large. 
When,  therefore,  one  devotes  his  property  to  a  use  in  which  the  public  has 
an  interest,  he,  in  effect,  grants  to  the  public  an  interest  in  that  use,  and 
must  submit  to  be  controlled  by  the  public  for  the  common  good,  to  the 
extent  of  the  interest  he  has  created.  He  may  withdraw  his  grant  by  dis- 
continuing the  use ;  but  so  long  as  he  maintains  the  use  he  must  submit  to 
the  control."     Munn  v.  Illinois   (1876),  94  U.  S.  113,  126. 


WITHDRAWAL   FROM    PUBLIC    SERVICE,  447 


THE  YOEK  AND  NOETH  MIDLAND  RAILWAY  CO.  v. 
THE  QUEEN  ON  THE  PEOSECUTION  OF  BUETON 
AND  LEAING. 

1  Ellis  &  Bl.  858.     1853.^ 

Jervis,  C.  J.,  in  this  term  (April  29th),  delivered  judgment. 

This  was  a  writ  of  error  from  a  judgment  of  the  Court  of 
Queen's  Bench,  upon  a  demurrer  to  a  return  to  a  mandamus  com- 
manding the  plaintiffs  in  error,  the  defendants  in  the  Court  be- 
low, to  purchase  lands  and  make  a  railway  from  Market  Weighton 
to  Cherry  Burton,  pursuant  to  stat.  12  &  13  Vict.  e.  Ix.,  the  York 
and  North  Midland  Eailway  Act  of  1849.  After  argument  and 
time  taken  to  consider  in  that  Court,  my  brother  Eele  was  of 
opinion  that  the  plaintiffs  in  error  were  entitled  to  judgment;  but 
Lord  Campbell  was  of  a  different  opinion:  and,  my  brother 
Crompton  concurring  with  him,  the  prosecutors  had  judgment; 
and  a  peremptory  mandamus  was  awarded. 

We  have  carefully  considered  this  case;  and,  having  examined 
the  authorities  cited,  and  the  statutes,  are  of  opinion  that  my 
brother  Eele  was  right  in  the  view  which  he  took  of  it ;  that  the 
judgment  ought  to  have  been  given  for  the  plaintiffs  in  error  and 
not  for  the  prosecutors;  and  that  the  judgment  of  the  Court  of 
Queen's  Bench  must  be  reversed. 

The  facts  which  raise  the  question  may  be  shortly  stated.  In 
1846  the  plaintiffs  in  error  obtained  an  Act  empowering  them  to 
make  a  railway  from  York,  through  Market  Weighton  and  Cherry 
Burton  to  Beverley.  They  made  a  portion  of  this  line,  from  York 
to  Market  Weighton,  but  did  nothing  upon  the  remainder  of  it. 
The  powers  of  their  Act  expired,  as  to  so  much  of  their  line  as 
lies  between  Cherry  Burton  and  Beverley,  before  the  mandamus 
was  applied  for :  but  in  1849  they  obtained  an  Act,  authorizing 
them  to  abandon  the  line  between  Market  Weighton  and  Cherry 
Burton,  and  to  substitute  in  lieu  thereof  the  line  now  under  dis- 
cussion.- 

There  remains  but  one  further  view  of  the  case  to  be  considered ; 
and  of  that  we  have  partly  disposed  in  the  observations  which  we 
have  already  made.  But,  in  as  much  as  Lord  Campbell  proceeded 
upon  this  ground  only  in  the  Court  below,  although  it  was  not 

1  A  map  and  part  of  the  opinion  are  omitted. —  Ed. 

2  In  the  part  of  the  opinion  omitted  the  court  decided  that  there  was  noth- 
ing in  the  terms  of  the  statute  of  1849  to  cast  upon  the  plaintiffs  in  error 
the  duty  to  complete  the  railway,  and  that  there  was  no  contract  between 
the  plaintiffs  in  error  and  the  landowners  which  could  be  enforced  by  man- 
damus.—  Ed. 


448  WITHDRAWAL  FROM   PUBLIC   SERVICE.         [CHAP.   VII. 

much  relied  upon  before  us  in  argument,  we  have,  out  of  respect 
to  his  high  authority,  most  carefully  examined  it,  and  are  of 
opinion  that  the  mandamus  cannot  be  supported  upon  the  ground 
that  the  railway  Company,  having  exercised  some  of  their  powers, 
and  made  part  of  their  line,  are  bound  to  make  the  whole  railway 
authorized  by  their  statutes. 

It  is  unnecessary  here  to  determine  the  abstract  proposition,  that 
a  work,  which  before  it  is  begun  is  permissive,  is  after  it  is  begun 
obligatory.  We  desire  not  to  be  understood  as  assenting  to  the 
proposition  of  my  brother  Erle,  that  "many  cases  may  occur 
where  the  exercise  of  some  of  the  compulsory  powers  may  create 
a  duty  to  be  enforced  by  mandamus."  And,  on  the  other  hand, 
we  do  not  say  that  such  may  not  be  the  law.  If  a  Company,  em- 
powered by  Act  of  Parliament  to  build  a  bridge  over  the  Thames, 
were  to  build  one  arch  only,  it  would  be  well  deserving  of  considera- 
tion whether  they  ought  to  be  indicted  for  a  nuisance  in  obstruct- 
ing the  river,  or  for  the  non-performance  of  a  duty  for  not  com- 
pleting the  bridge.  It  is  sufficient  to  say  that  in  this  case  there  are 
no  circumstances  to  raise  such  a  duty,  if  such  a  duty  can  be  created 
by  the  act  of  the  party.  The  plaintiffs  in  error  have  made  the 
principal  portion  of  their  line,  and  they  have  abandoned  the  residue 
from  no  corrupt  motives,  but  because  Beverley  has  already  sufficient 
railway  communication,  and  because  the  residue  of  their  line  passes 
through  a  country  thinly  populated,  and,  if  made,  would  not  be  re- 
munerative. 

But  it  is  said  that  a  railway  Company  are  not  in  the  situation  of 
purchasers  of  land  with  liberty  to  convert  it  to  any  purpose,  or 
to  allow  it  to  lie  waste;  that  they  are  allowed  to  purchase  it  only 
for  a  railway;  and,  having  acquired  it  under  the  compulsory  pow- 
ers of  the  Act,  there  must  be  an  obligation  on  the  Company  to 
apply  the  land  to  that  and  to  no  other  purpose.  Subject  to  the 
qualification  in  the  Act,  this  is  undoubtedly  true.  Having  ac- 
quired the  lands  of  a  particular  landowner,  the  Company  could 
not  retain  them  by  merely  laying  rails  upon  the  lands  so  taken ;  and 
we  agree  that  it  never  was  intended  that  a  landowner  should  be  left 
with  a  high  mound  or  a  deep  cutting  running  through  his  estate 
and  leading  neither  to  nor  from  any  available  terminus.  The 
precaution  against  such  a  wasteful  expenditure  of  capital  might 
perhaps  safely  be  left  to  the  self-interest  of  the  Company:  but,  if 
such  a  work  were  to  be  done,  it  would  not  be  a  practicable  railway, 
and  after  five  years  the  powers  of  the  Act  would  expire  and  the 
land  revest  in  the  original  proprietor.  It  is  true  that  he  would 
sustain  some  inconvenience  without  the  corresponding  advantage 
of  railway  communication;  but  in  the  meantime  he  would  have 


WITHDRAWAL   FROM    PUBLIC    SERVICE.  449 

received  full  compensation  for  the  market  value  of  the  land  and  for 
all  damage  by  severance  or  otherwise,  and  would  receive  back  the 
land  on  more  reasonable  terms.  To  be  a  railway,  it  must  have 
available  termini.  When  the  statutes  passed,  all  persons  supposed 
that  the  termini  would  be  York  and  Beverley;  and,  if  the  argu- 
ment is  well  founded  and  the  Company  are  bound  by  taking  land 
on  any  portion  of  the  railway  to  complete  the  whole  line,  it  would 
seem  to  follow  that  one  of  the  prosecutors,  by  compelling  the  Com- 
pany to  take  his  land  on  the  line  from  Market  Weighton  to  Cherry 
Burton,  would  thus  entitle  himself  to  a  mandamus  to  compel  them 
to  make  the  line  from  Cherry  Burton  to  Beverley,  and,  the  Act 
having  expired,  to  apply  to  Parliament  for  a  renewal  of  their  pow- 
ers for  that  purpose.  But,  although  the  termini  were  originally 
intended  to  be  York  and  Beverley,  it  is  plain,  the  Legislature  con- 
templated the  possibility  of  the  line  being  abandoned,  or  being  only 
partially  made,  because  in  the  one  case  the  powers  of  the  Act  were 
to  cease,  and  in  the  other  they  were  partially  continued.  An 
option,  therefore,  is  given  to  some  one.  By  the  course  taken,  the 
Court  of  Queen's  Bench  has  exercised  that  option,  and  said  the 
line  shall  be  made,  not  to  Beverley,  but  to  Cheriy  Burton.  In 
our  opinion  that  option  was  left  to  the  Company;  and,  the  Com- 
pany having  hond  fide  made  an  available  railway  over  the  land 
taken,  their  obligation  to  the  landowners  has  in  this  respect  been 
fulfilled. 

The  cases  upon  this  subject  are  very  few:  and  the  absence  of 
authority  is  very  striking,  when  we  remember  how  many  Acts  have 
passed  in  pari  materia,  not  only  for  railways  but  also  for  bridges 
and  turnpike  roads.  Notwithstanding  the  numerous  occasions  in 
which  such  proceedings  might  have  been  taken,  and  the  manifest 
interest  of  landowners  to  enforce  their  rights,  no  instance  can  be 
found  of  any  indictment  for  disobeying  such  a  statute,  or  of  a 
mandamus  for  the  purpose  of  enforcing  it.  If  correctly  reported, 
Lord  Maxsfield  determined  this  point  in  Eex  v.  The  Proprietors 
of  the  Birmingham  Canal,  3  W.  Bl.  708 ;  for  he  says :  "  The  Act 
imports  only  an  autlioritij  to  the  proprietors,  not  a  command: 
They  may  desert  or  suspend  the  whole  work,  and  a  fortiori  any  part 
of  it."  On  the  other  side,  the  language  of  Lord  Eldon  in  Blake- 
more  V.  The  Glamorganshire  Canal  Navigation,  1  Myl.  &  K.  163, 
is  referred  to  as  an  authority  for  this  mandamus.  In  our  opinion 
it  does  not  bear  that  construction,  although  it  appears  that  the 
Court  of  Queen's  Bench  took  a  different  view  of  that  authority  in 
Eegina  v.  The  Eastern  Counties  Railway  Company,  10  A.  &  E. 
531  (E.  C.  L.  R.  vol.  37),  and  was  inclined  to  act  upon  it  and 
award  a  mandamus.     The  writ  was  subsequently  withheld  in  that 


450  WITHDRAWAL    FROM    TUBLIC    SERVICE.  [CHAP.    VII. 

case  upon  another  ground;  but  Lord  Denman  seems  to  have  been 
of  opinion  that  upon  a  fitting  occasion  a  mandamus  ought  to  go. 
This,  and  the  recent  cases  in  the  Queen's  Bench  now  under  discus- 
sion, are  the  only  cases  which  bear  upon  the  subject.  We  feel  that 
Lord  Denman  and  Lord  Campbell  are  high  authorities  upon  this 
or  any  other  matter,  and  are  both  equally  entitled  to  the  respect  of 
this  Court :  but  we  are  bound  to  pronounce  our  own  judgment ;  and, 
after  the  most  careful  consideration,  are  of  opinion  that  judgment 
ought  to  be  for  plaintiffs  in  error. 

The  result  is,  that  the  judgment  of  the  Court  below  must  be 
reversed. 

Judgment  reversed.^ 


THE  KING  V.   THE  SEVEEN  AND  WYE  RAILWAY  CO. 

2  Barn.  &  Aid.  646.     1819.^ 

W.  E.  Taunton  had  obtained  a  rule,  calling  upon  the  Severn 
and  Wye  Railway  and  Canal  Company  to  shew  cause  why  a  writ  of 
mandamus  should  not  issue,  directed  to  them,  commanding  them 
to  reinstate,  lay  down  again,  and  maintain  part  of  a  certain  rail- 
way or  tram-road,  by  them  theretofore  made  under  the  authority 
of  certain  Acts  of  Parliament,  from  or  near  a  place  called  Miry 
Stock  to  the  summit  of  Churchway  Engine,  and  which  had  been 
taken  up  and  destroyed  by  the  company.  It  appeared  by  the 
affidavits  that  the  company  had  been  incorporated  by  two  Acts  of 
Parliament,  the  49  and  50  G.  3,  and  were  empowered  to  make  and 
maintain  a  railway  or  tramroad,  passable  for  waggons  and  other 
carriages  from  and  to  certain  places  mentioned  in  the  Act,  and, 
among  others,  from  or  near  a  place  called  Miry  Stock  to  the  sum- 
mit of  Churchway  Engine,  in  His  Majesty's  Forest  of  Dean;  that 
they  were  empowered  to  raise  money  for  that  purpose,  and  to  apply 
the  same  towards  making  and  completing  the  railway,  and  to  re- 
ceive certain  rates  of  tonnage  for  goods  carried  along  the  railway; 
and  all  persons  were  to  have  free  liberty  to  pass  upon  and  use  the 
railways  with  waggons  or  other  carriages,  constructed  as  therein 
described,  upon  payment  of  the  rates ;  and  it  was  provided,  that  if 
the  company  did  not  complete  the  railway  within  three  years,  the 
Act  was  to  be  no  longer  in  force.  It  appeared  that  the  company 
did  complete  the  railway  within  that  time,  and  that  they  received 
tolls  for  the  passage  of  carriages  over  that  part  of  the  railway 

3  See  State  of  Minnesota  ex  rel.  Atty.  Genl.  v.  Southern  Minn.  R.  R.  Co. 
(1871),  18  Minn.  40. 

1  Arguments  of  counsel  and  concurring  opinions  of  Abbott,  C.  J.,  and 
Bayley,  J.,  are  omitted. —  Ed. 


WITHDRAWAL    FROM    PUBLIC    SERVICE.  451 

which  extended  from  Miry  Stock  to  the  summit  of  Churchway 
Engine,  which  part,  for  some  time  after  the  making  of  it,  was  used 
by  the  public,  who  experienced  the  convenience  proposed  by  the 
promoters  of  the  works.  The  affidavits  then  stated  that  the  leading 
members  of  the  company  having  become  the  owners  of  collieries 
situate  on  another  branch  of  the  rail-road,  the  company,  a  short 
time  after  the  branches  had  been  completed,  for  the  purpose  of 
preventing  competition  from  the  collieries  communicating  with  that 
branch  of  the  railway  extending  from  Miry  Stock  to  the  summit 
of  Ghurchway  Engine,  determined  to  render  that  branch  of  the 
rail-road  impassable,  and  caused  the  iron  tram-plates  thereon,  for  a 
space  of  several  hundred  yards,  to  be  taken  up,  and  thereby  destroyed 
that  branch ;  whereby  the  public,  and  particularly  persons  possessing 
collieries  in  that  part  of  the  Forest  of  Dean  which  lies  contiguous  to 
the  last-mentioned  branch,  had  been  deprived  of  the  benefit  of  using 
that  branch  of  the  railway.  The  affidavits  then  stated  that  applica- 
tion had  been  made  to  the  company  to  reinstate  the  tram-plates,  but 
that  they  had  refused  so  to  do. 

Best,  J.  Both  upon  principle  and  authority  I  am  of  opinion, 
that  the  Court  ought  to  grant  this  mandamus.  Numerous  appli- 
cations are  made  to  Parliament  by  speculative  individuals,  to  form 
these  navigable  canals  and  railways:  great  public  benefits  are  held 
out  as  an  inducement  to  the  Legislature  to  sanction  these  undertak- 
ings; and  when  their  sanction  is  obtained,  is  it  to  be  permitted  to 
these  persons  to  say,  that  they  will  do  only  that  which  is  beneficial 
to  themselves,  and  disregard  entirely  the  interests  of  the  public? 
It  has  been  argued  in  this  case,  that  there  is  a  specific  remedy  by 
indictment,  and  that,  therefore,  we  ought  not  to  grant  a  mandamus. 
I  think,  however,  that  that  objection  ought  not  to  prevail  in  this 
case,  for  an  indictment  does  not  afford  a  remedy  equally  effectual 
to  compel  the  reinstating  of  the  road,  wdiich  is  the  purpose  to  be 
answered  by  the  granting  of  this  writ.  The  Court  can  only  impose 
a  fine,  in  case  a  corporation  be  convicted  upon  an  indictment,  and 
that  fine  may  be  levied  by  distress  from  time  to  time;  and  even 
then  the  corporation  may  elect  not  to  repair  the  road;  and  at  all 
events  considerable  delay  would  ensue.  By  mandamus,  on  the  other 
hand,  the  defendants  will  be  compelled  to  do  the  thing  required, 
unless,  by  the  return  to  the  mandamus,  they  shew  a  sufficient  rea- 
son for  not  doing  it ;  and  if  they  shew  no  such  reason,  then  a  per- 
emptory mandamus  issues;  and,  in  case  of  non-compliance,  an 
attachment  may  issue  against  those  who  disobey  the  writ.  There 
being,  therefore,  no  other  remedy  equally  efi'ectual  to  answer  the 
purposes  required,  I  think  that  we  ought  to  grant  a  mandamus ;  and, 
consequentl}',  that  this  rule  ought  to  be  made  absolute. 


453  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII. 


FAEMEES'   LOAN    AND    TEUST    CO.    v.    HENNING,    EE- 
CEIVEE  OF  LEAVENWOETH,  LAWEENCE  AND  GAL- 
VESTON EAILEOAD  CO. 

Fed.  Cas.  No.  4GG6.     1878.^ 

This  was  an  application  by  the  attorney-general  of  the  state  of 
Kansas  for  an  order  on  [B.  S.  Henning]  the  receiver  of  the  Leaven- 
worth, Lawrence  and  Galveston  Eailroad  Company  to  repair  and 
operate  said  railroad  to  the  city  of  Leavenworth,  the  initial  point 
named  in  its  charter.  The  railroad  was  in  the  hands  of  said  re- 
ceiver, who  was  appointed  by  this  court  in  an  action  by  the  Farm- 
ers' Loan  and  Trust  Company,  trustee,  to  foreclose  its  mortgage 
against  said  railroad.  The  petition  of  the  attorney-general  recited 
the  original  and  amended  charters  of  said  company,  granted  by  the 
territory  and  state  of  Kansas,  respectively,  and  dated  February 
12th,  1858,  and  February  29th,  1864,  by  which  said  company  was 
authorized  to  construct,  maintain  and  operate  a  railroad  from  Leav- 
enworth, by  the  way  of  Lawrence,  to  the  southern  line  of  the  state. 
Also,  the  grant  of  lands  by  the  general  government  to  the  state 
of  Kansas,  to  aid  in  the  construction  of  said  railroad,  dated  March 
3d,  1863;  the  act  of  the  legislature  accepting  said  grant  by  the 
state,  and  transferring  the  same  to  the  said  railroad  company,  dated 
February  13th,  1864,  and  the  acceptance  by  the  company  of  the  con- 
gressional grant  and  of  the  provisions  of  the  said  legislative  act, 
dated  March  13th,  1864,  the  state  grant  of  one  hundred  and  twenty- 
five  thousand  acres  of  land,  to  aid  in  the  construction  of  said  rail- 
road, dated  February  23d,  1866,  and  the  acceptance  of  the  same  by 
the  company,  dated  May  16th,  1866.  Also,  an  act  of  the  legisla- 
ture changing  the  name  of  said  company  from  the  Leavenworth, 
Lawrence  and  Fort  Gibson  Eailroad  Company  to  the  Leavenworth, 
Lawrence  and  Galveston  Eailroad  Company,  approved  February 
24th,  1866. 

And  the  said  petition  further  alleged  that  said  railroad  com- 
pany did,  in  pursuance  of  its  charter  and  agreements,  construct, 
and  since  the  year  1872  did  operate  and  maintain  its  road,  from  a 
point  of  junction  with  the  Kansas  Pacific  Eailroad,  on  the  north 
side  of  the  Kansas  river,  opposite  the  city  of  Lawrence,  to  the  south 
line  of  the  state,  and  did,  under  an  agreement  with  the  Kansas  Pa- 
cific Company,  run  its  cars  and  transport  its  freight  and  passengers 
over  said  last-named  railroad,  from  its  junction  therewith  to  and 
from  the  city  of  Leavenworth,  thus  making  a  continuous  line  from 

1  Part  of  the  opinion  is  omitted. —  Ed. 


WITHDRAWAL    FROM    PUBLIC    SERVICE.  453 

said  city,  via  Lawrence  to  the  south  line  of  the  state.  That  said 
Henning  was  appointed  receiver  of  said  railroad  by  an  order  of  this 
court  on  the  5th  day  of  March,  1875,  and  that  said  receiver  contin- 
ued to  operate  and  maintain  said  road,  as  aforesaid,  until  the  8th 
day  of  June,  1877.  That  since  said  last  mentioned  date  said  re- 
ceiver has  refused  and  neglected,  and  does  still  refuse  and  neglect, 
to  operate  said  railroad  from  Lawrence  to  Leavenworth,  or  to  run 
its  cars  for  transporting  freight  and  passengers  to  and  from  Leav- 
enworth, under  said  agreement  with  the  Kansas  Pacific  Company, 
and  has  abandoned  said  line  of  road,  and  refuses  and  neglects  to 
maintain  the  bridge  of  said  company  across  the  Kansas  river  at 
Lawrence,  and  has  permitted  the  same  to  remain  unused  and  to 
go  to  decay,  to  the  great  damage  of  the  commerce  of  the  state,  and 
especially  of  the  cities  of  Leavenworth  and  Lawrence,  and  to  the 
detriment  of  the  traveling  public;  and  praying  for  an  order  that 
said  receiver  be  required  to  repair  and  maintain  said  railroad  and 
bridge,  and  operate  said  road,  as  heretofore,  from  Leavenworth  to 
Lawrence,  and  from  thence  to  the  southern  line  of  the  state,  as  pro- 
vided by  its  said  charter.  To  this  petition  the  receiver  filed  a  gen- 
eral demurrer. 

Willard  Davis,  Atty.  Gen.,  and  H.  B.  Johnson,  for  the  State. 
"Wallace  Pratt  and  S.  0.  Thatcher,  for  respondent. 
Foster,  District  Judge.  The  allegations  of  the  petition  stand- 
ing confessed,  and  no  question  being  made  as  to  the  form  of  the 
proceedings,  the  main  question  is  to  determine  what  obligations 
and  duties  the  railroad  company  owes  to  the  state,  under  its  char- 
ter and  the  grants  of  land  by  the  general  government  and  the  state, 
and  the  acceptance  thereof  by  said  company.  And  to  these  ques- 
tions the  arguments  of  counsel  have  been  addressed,  and  have  taken 
a  wide  range,  (it  appears  to  be  well  supported  by  authority  and 
reason  that  the  powers  and  privileges  granted  by  the  charters  of 
this  company  are  permissive  only,  and  not  obligatory,  and  the  com- 
pany could  elect  whether  it  would  proceed  to  exercise  the  fran- 
chises thereby  granted,  or  whether  it  would  not.  And  if  it  chose 
the  latter  course,  the  only  penalty  would  be  a  forfeiture  of  the 
rights  and  privileges  conferred.')  York  &  N.  M.  E.  Co.  v.  The 
Queen,  1  El.  &  Bl.  858;  State  v.  Southern  Minnesota  R.  Co.,  18 
Minn.  40  [Gil.  21]  ;  High,  Extr.  Leg.  Eem.  §  316.  It  was  held 
by  the  court  of  exchequer  chamber,  in  the  case  first  above  cited, 
that  the  mandamus  would  not  lie  to  compel  the  company  to  exer- 
cise its  franchises  as  to  a  part  of  the  route  named  in  its  charter, 
and  abandoned  by  the  company  when  it  had  not  actually  proceeded 
to  build  or  operate  its  road  over  the  part  abandoned,  and  no  cor- 
rupt motives  are  imputed  to  the  company,  in  abandoning  the  line. 


454  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII. 

But  when  the  company  has  once  built  and  operated  its  railroad  be- 
tween the  points  named  in  its  charter,  the  case  seems  to  stand  on 
different  grounds,  and  it  seems  the  company  may  be  compelled  by 
mandamus  to  carry  out  the  objects  for  which  it  was  created,  and 
to  exercise  its  charter  obligations.  The  following  cases  sustain 
and  carry  out  this  view:  State  v.  Hartford  &  N.  H.  E.  Co.,  29 
Conn.  538 ;  King  v.  Severn  &  W.  R.  Co.,  2  Barn.  &  Aid.  644 ;  High, 
Extr.  Leg.  Rem.  §§317,  319,  320;  People  v.  Troy  &  B.  R.  Co.,  37 
How.  Pr.  427;  People  v.  Albany  &  V.  R.  Co.,  24  N.  Y.  261,  37 
Barb.  216. 

The  case  last  cited  has  been  referred  to  by  defendants'  counsel 
as  a  strong  case  in  defendants'  favor,  and  it  is  urged  that  the  only 
remedy  of  the  state  is  to  take  proceedings  to  annul  and  forfeit  the 
franchises  of  the  company.  But  upon  examination  of  the  case  in 
24  N.  Y.,  it  will  be  seen  that  the  opposite  doctrine  is  held  by  a 
majority  of  the  judges.  That  proceeding  was  not  by  mandamus, 
but  was  a  proceeding  by  the  attorney-general  for  an  injunction,  and 
for  the  specific  performance  of  the  charter  obligations  of  the  com- 
pany, and  the  main  question  to  be  decided  was  whether  such  a  pro- 
ceeding could  be  sustained.  It  is  true  Judge  Wright,  who  deliv- 
ered the  opinion  of  the  court,  went  farther,  and  not  only  argues 
that  the  action  could  not  be  maintained,  but  that  by  no  proceeding 
could  the  company  be  compelled  to  keep  up  and  operate  its  road,  and 
that  the  only  remedy  the  people  had  was  indictment  or  proceedings 
to  forfeit  the  franchise.  But  while  all  the  judges  concurred  in  the 
conclusion,  i.  e.,  that  the  judgment  of  the  supreme  court  dismiss- 
ing the  bill  should  be  affirmed,  four  out  of  the  six  judges  sitting  in 
the  case  "  however,  were  of  the  opinion  that  a  corporation  is  under 
a  legal  obligation  to  exercise  its  franchises,  and  that  it  has  not  the 
option  to  discontinue  a  part  of  its  road  and  forfeit  its  franchise. 
They  agree  that  the  remedy  is  not  by  action  in  equity  for  a  specific 
performance,  but  by  mandamus  or  indictment,  or,  at  the  election 
of  the  neople,  by  proceeding  to  annul  the  existence  of  the  corpora- 
tion." I  So  it  is  apparent  this  case  is  in  point  that  the  state  may 
proceed^  by  mandamus,  to  compel  the  company  to  exercise  its  cor- 
porate powers  when  it  has  once  constructed  and  operated  its  road. 
Having  entered  upon  the  exercise  of  its  charter  franchises  it  then 
owes  a  duty  to  the  public  which  it  may  not,  at  its  caprice,  abandon. 
And  in  equity  and  good  conscience  the  obligation  is  still  greater 
where  the  company  has  been  the  recipient  of  land  grants  and  sub- 
sidies to  aid  the  construction  of  its  road.y 

2  See  State  v.  Hartford  &  N.  H.  R.  R.  Co.  (1861),  29  Conn.  538;  Talcott 
V.  Township  of  Tine  Grove  (1872),  1  Flippin  (Cir.  Ct.),  120,  145;  State  v. 
Sioux  City  &  P.  R.  R.  Co.  (1878).  7  Neb.  357;  State  ex  rel.  Grinsfelder 
V.  Spokane  St.  Ry.  Co.   (1898).  19  Wash.  518:  State  ex  rel.  City  of  Bridge- 


WITHDRAWAL   FROM   PUBLIC    SERVICE.  455 

SAN  ANTONIO  STEEET  EAILWAY  CO.  v.  STATE  ex  rel. 

ELMENDOEF. 

90  Tex.  520.     1897.^ 

Gaines,  C.  J.  This  case  arose  by  a  petition  filed  in  the  name  of 
the  state  of  Texas  upon  the  relation  of  Henry  Elmendorf  and  others 
to  compel  the  plaintiff  in  error  to  operate  a  part  of  its  lines  upon 
■v^hich  it  had  ceased  to  run  its  cars.  Demurrers  to  the  petition 
were  overruled,  and  exceptions  to  the  answer  of  respondent  were 
sustained,  and  thereupon  the  peremptory  writ  was  awarded  as 
prayed  for  in  the  petition.  This  judgment  was  affirmed  upon  ap- 
peal, and  to  the  judgment  of  affirmance  this  writ  of  error  has  been 
granted. 

The  first  question  is :  Did  the  facts  alleged  authorize  the  relief 
prayed  for  in  the  petition?  It  was  alleged  that  the  respondent 
company  was  a  corporation,  chartered  by  a  special  act  of  the  legis- 
lature passed  May  2,  1874,  and  authorized  to  operate  street  railways 
in  the  city  of  San  Antonio  for  the  term  of  50  years ;  that  it  applied 
to  the  city  council  of  the  city  for  authority  to  construct  certain 
lines  within  the  city  limits,  and  that  the  privilege  was  granted  by 
an  ordinance,  which  is  copied  in  the  petition.^ 

It  is  not  expressly  averred  that  at  the  time  the  ordinance  was 
passed  the  company  had  already  constructed  and  had  in  operation 
a  line  or  lines  of  street  railway  in  the  city ;  but  we  think  that  this  is 
to  be  inferred  from  section  1,  which  speaks  of  the  streets  over  which 
the  privilege  to  construct  and  operate  was  thereby  granted  as  "  ad- 
ditional streets  and  avenues."  It  was  further  averred  that  the  com- 
pany had  constructed,  and  for  a  time  had  operated,  the  line  from 
its  beginning  point  to  Highland  Park,  but  that,  while  it  had  con- 
tinued to  operate  that  portion  of  that  line  nearest  the  city,  it  had 
abandoned  the  operation  of  a  part.  The  prayer  was  for  a  writ  of 
mandamus  to  compel  the  respondent  to  operate  that  entire  line. 

It  is  a  well-settled  doctrine  that  a  corporation  may  be  compelled 
by  the  writ  of  mandamus  to  perform  a  duty  imposed  by  statute. 
The  duty  need  not  be  express ;  it  may  be  implied.  Clearly,  when 
it  appears  by  fair  implication  from  the  terms  of  its  charter,  it  is 
as  imperative  as  if  the  obligation  were  expressed.     But  as  to  cor- 

ton   V.    Bridgeton   &   M.    T.    Co.    (1899).   62   N.    J.    L.    592;    Thompson   v. 
Schenectady  Ry.  Co.    (1904),  131  Fed.  577;  Paige  v.  Schenectady  Ry.  Co. 
(1904).  178  N.  Y.  102,  114. 
Compare  Union  Pac.  R.  R.  Co.  v.  Hall  (1875),  91  U.  S.  343. 

1  Arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed. 

2  The  ordinance  granted  to  the  company  the  "  rights,  privileges  and  fran- 
chises "  to  operate  a  street  railway  in  certain  streets  "  during  the  term  of 
their  charter." —  Ed. 


456  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII. 

porations  quasi-public  in  character  —  such,  for  example,  as  those 
chartered  for  the  carriage  of  passengers  and  freight  —  there  are 
decisions  which  hold  that  they  owe  certain  duties  to  the  public 
which  they  may  be  compelled  to  perform,  although  not  enjoined  by 
their  charters,  either  in  express  terms  or  by  specific  implication. 
But  we  have  been  unable  to  discover  that  any  well-defined  rule  has 
been  laid  down  by  the  authorities  by  which  we  may  determine  in 
every  case  what  implied  duties  are  assumed  by  such  a  corporation 
by  the  acceptance  of  its  charter.^ 

The  legislature,  in  creating  a  corporation,  has  the  power  to  give 
it  an  option  to  do  or  not  to  do  the  acts  which  it  is  authorized  to 
perform.  On  the  other  hand,  it  may  impose  upon  the  corporation, 
as  the  law  of  its  creation,  the  obligation  to  exercise  to  their  fullest 
extent  the  powers  which  are  granted.  In  either  case  the  proposed 
corporators  may  accept  or  not;  and,  in  the  latter,  if  they  do  ac- 
cept, they  may  be  compelled  by  mandamus  to  perform  the  duties 
so  imposed.  But  to  say  that  in  granting  a  charter  to  do  a  public 
service  there  is  no  difl:erence  between  making  it  lawful  to  do  an 
act,  and  imposing  it  as  an  obligation  to  perform  it,  is  to  say  that 
by  reason  of  the  public  interest  involved  language  is  to  have  a  dif- 
ferent construction  and  effect  from  what  it  would  have  in  statutes 
in  general  or  in  private  contracts.  Expressions  may  be  found  in 
the  opinions  of  courts  which  countenance  that  doctrine,  but  we 
think  there  it  is  based  upon  an  assumption  that  cannot  be  main- 
tained upon  sound  principle.  In  legislating,  the  lawmaking  power 
undertakes  to  determine  what  is  to  the  interest  of  the  public,  and 
under  the  limitations  of  the  constitution  it  is  the  sole  judge  of 
what  will  promote  the  public  utility,  and  must  be  ppsumed  to  be 
capable  of  expressing  its  will  in  intelligible  words.  ^\^When,  there- 
fore, a  corporation,  whether  quasi-public  or  purely  private,  is 
granted  the  privilege  of  doing  an  act,  and  there  are  in  its  charter 
no  express  terms  which  make  it  obligatory  to  do  the  act,  or  other 
words  from  which  by  fair  construction  tliat  intention  can  be  gleaned, 
we  do  not  see  upon  what  sound  principle  the  duty  can  be  imposed. 

The  allegations  in  the  petition  in  this  case  show  that  the  re- 
spondent company  was  chartered  merely  for  the  purpose  of  con- 
structing and  operating  street  railways  in  the  city.  The  special  act 
merely  .gave  it  the  right  of  corporate  existence  for  the  purpose  in- 
dicated.j  Tugwell  v.  Ferry  Co.,  74  Tex.  480,  9  S.  W.  120,  and  13 

3  The  court  then  cited  and  commented  upon  Northern  Ry.  Co.  v.  Wash- 
ington (1892),  142  U.  S.  492;  People  v.  Railway  (18S7).  104  N.  Y.  58; 
State  V.  Railway  (188.5).  17  Neb.  647;  People  v.  Railway  (1889).  130  111. 
17.5;  York  &  N.  M.  Rv.  Co.  v.  The  Quenn  (1853),  1  Ellis  &  Bl.  858;  State 
V.  Hartford  &  N.  H.  R.  R.  Co.  (1801).  29  Conn.  538;  City  of  Potwin  Place 
V.  Topoka  Ry.  Co.  (1893).  51  Kan.  G09 ;  People  v.  Railway  (18G2).  24 
N.  Y.  201.— Ed. 


WITHDRAWAL   FROM    PUBLIC    SERVICE.  457 

S.  W.  654.  The  streets  were  under  the  control  of  the  city  council. 
The  company  could  do  nothing  without  the  consent  of  the  coun- 
cil. The  franchise  in  question  was  granted  by  the  city  council,  and 
the  claim  is  that  it  is  by  virtue  of  that  concession,  and  its  acceptance 
by  the  company,  that  the  duty  arose.  But  the  ordinance  (which  is 
quoted  above)  merely  grants  "  the  privilege  "  of  constructing  arid 
maintaining  street  railways  over  the  lines  therein  designated.  Xo 
clearer  words  of  mere  permission  could  have  been  employed.  Not 
only  this,  but  there  is  in  the  ordinance  neither  sentence,  phrase, 
nor  word  that  indicates  that  it  was  the  intention  of  the  council  to 
make  it  a  condition  of  the  acceptance  of  its  grant  that  the  com- 
pany should  be  bound  to  construct  and  operate  railways  over  the 
streets  which  were  therein  specified.  The  company  are  required  to 
observe  all  the  ordinances  of  the  city  then  existing,  but  it  is  not 
averred  that  there  was  any  ordinance  in  existence  at  the  time  of 
the  acceptance  of  the  franchise  which  imposed  that  obligation. 

The  following  succinct  and  accurate  statement  of  the  law  from 
Eedfield  on  Eailways  has  been  often  quoted  with  approval: 
"  Where  the  charter  of  a  corporation,  or  the  general  statute  in  force 
and  applicable  to  the  subject,  imposes  a  specific  duty,  either  in 
terms  or  by  fair  and  reasonable  construction  and  implication,  and 
there  is  no  specific  or  adequate  remedy,  the  writ  of  mandamus  will 
be  awarded."  Eedf.  E.  E.  p.  678.  It  is  clear  that  the  ordinance 
in  this  case  neither  by  express  terms  nor  by  implication  imposes  the 
duty  upon  the  company.  If  the  duty  to  construct  and  maintain  the 
line  is  to  be  established,  it  must  be  upon  the  assumption  that  every 
privilege  granted  by  a  legislative  body  in  reference  to  matter  of 
public  interest  imposes  upon  the  grantee  who  accepts  it  the  duty  to 
perform  the  acts  he  is  allowed  to  perform.  The  assumption,  in  our 
opinion,  is,  as  we  have  already  intimated,  not  based  upon  sound  rea- 
son, and  is  in  opposition,  at  least,  to  the  weight  of  authority. 

Of  the  numerous  similar  franchises  granted  in  this  state  many 
have  doubtless  been  abandoned,  without  objection,  so  far  as  we  are 
advised,  from  any  quarter.  It  does  not  follow  that  a  just  objection 
may  not  have  been  made;  but  the  fact  that  none  has  been  made 
serves,  we  think,  in  some  measure  to  show  that  the  practical  con- 
struction of  such  charters  has  been  that  the  grant  is  permissive  and 
not  obligatory. 

We  are  of  opinion  also  that  the  fact  that  the  road  has  been  con- 
structed and  operated,  and  that  a  part  is  now  operated,  makes  no 
difference.  Under  the  grant  of  a  privilege  to  construct  and  main- 
tain, if  after  acceptance  it  is  permissive  only  to  construct,  it  is  not 
obligatory  to  maintain.  But  we  do  not  hold  that  the  company  can, 
against  the  will  of  the  city,  operate  a  part  of  its  line,  and  not  the 


458  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII, 

whole.  A  privilege  to  establish  an  entire  line  of  street  railway 
may  be  granted  when  the  privilege  of  constructing  and  operating  a 
part  only  would  not  be,  and  for  a  failure  to  operate  a  part  it  would 
seem  that  the  whole  might  be  forfeited.  It  seems  to  us  that  the 
remedy  in  this  case  is  to  forfeit  the  franchise  to  operate  the  branch 
line  in  controversy.  The  defendant,  in  its  answer,  offers  to  dis- 
continue the  operation  of  the  branch,  and  apparently  this  would 
have  been  a  good  answer  to  the  petition  if  an  answer  had  been 
necessary. 

We  would  not  be  understood  as  holding  that  tlie  common  law 
does  not  impose  «ome  duties  upon  companies  chartered  as  common 
carriers,  which  may  be  enforced  by  mandamus,  altl:y3ugh  no  mention 
of  such  duties  may  be  found  in  their  charters.  /All  carriers  who 
undertake  to  transport  goods  or  passengers  for  the  public  assume 
certain  duties  to  the  public ;  but  certainly  carriers  who  are  not  cor- 
porations may  at  any  time  discontinue  the  business,  if  they  elect 
to  do  so,  and  we  see  no  good  reason  why  corporations  may  not  dis- 
continue their  enterprises  when  the  charter  does  not  in  express 
terms  or  by  fair  implication  forbid  it.  j  If  it  is  the  will  of  the  leg- 
islature, or  of  a  municipal  body  to  whom  the  power  to  confer  the 
privilege  may  have  been  granted,  to  impose  upon  the  corporation 
the  duty  to  construct  and  to  continue  to  operate  the  work,  in- 
stead of  a  mere  permission  to  do  so,  it  is  not  difficult  so  to  provide 
by  incorporating  into  the  grant  some  language  which  evinces  that 
intention. 

It  follows  that,  in  our  opinion,  the  trial  court  erred  in  overruling 
the  demurrer  to  the  petition,  and  that  the  court  of  civil  appeals 
erred  in  not  so  holding.  It  not  appearing  that  that  petition  may 
be  amended  so  as  to  state  a  good  cause  of  action,  the  judgment  of 
the  court  of  civil  appeals  and  that  of  the  district  court  ar6  reversed, 
and  the  cause  dismissed.* 


PEOPLE   V.   EOME,  WATEETOWN   AND    OGDENSBUEGH 
EAILEOAD  CO. 

103  N.  Y.  95.     188G.^ 

Eaele,  J.  We  are  left,  therefore,  to  determine  simply  whether, 
upon  the  facts  which  we  must  assume  to  exist  in  this  case,  the  de- 
fendant ought,  in  the  public  interest,  as  an  absolute  duty,  to  be 

4  See  state  ex  rel,  Knight  v.  Helena  P.  &  L.  Co.    (1899),  22  Ont.  301. 

1  The  statement  of  the  facts  is  omitted  as  they  sufficiently  appear  from 
the  opinion.  Arguments  of  counsel  and  part  of  the  opinion  are  also  omitted. 
—  Ed. 


WITHDRAWAL    FROM    PUBLIC    SERVICE.  459 

compelled  to  rebuild,  maintain  and  operate  the  small  section  of 
road  which  it  abandoned.  We  have  not  here  the  question  which 
would  have  to  be  determined  if  the  Syracuse  and  jSTorthern  Eailroad 
Company  were  still  in  existence  and  had  abandoned  the  portion  of 
its  road  between  the  Pulaski  station  and  Washingtonville  station, 
so  that  passengers  and  freight  were  carried  only  to  and  from 
the  former  station.  But  we  have  a  case  where,  the  defendant  has 
succeeded  to  all  the  rights  and  obligations  of  that  railroad  com- 
pany, and  the  question  is,  whether  it  is  discharging  the  duty  to  the 
public  imposed  upon  it  by  the  consolidation  of  that  railroad  com- 
pany with  it.  After  the  consolidation  it  had  two  lines  from  Pulaski 
station  to  Washingtonville,  a  direct  line  about  seven  miles  long 
and  a  circuitous  line  by  way  of  Eichland  about  two  miles  longer. 
It  was  not  absolutely  bound  in  law  to  stop  any  of  its  trains  at  the 
village  of  Pulaski  or  the  village  of  Sandy  Creek.  It  would  have 
discharged  its  whole  duty  by  running  its  trains  through  from  the 
Pulaski  station  to  the  Washingtonville  station  without  stopping. 
It  would  cost  it  more  than  $15,000  annually  to  maintain  and  op- 
erate its  direct  road  from  Pulaski  station  to  Washingtonville  sta- 
tion without  adding  $1  to  its  income. 

It  could  accommodate  every  passeriger  and  every  pound  of  freight 
at  Washingtonville  station  or  at  the  Pulaski  station  by  carrying  it 
over  a  line  which  it  owned  by  way  of  Eichland.  Did  it  not  thus 
substantially  perform  the  duty  which  devolved  upon  it  as  the  suc- 
cessor of  the  Syracuse  and  Northern  Eailroad  Company?  It  car- 
ried all  passengers  and  freight  from  Washingtonville  to  Pulaski 
station  and  Syracuse,  and  all  passengers  and  freight  from  Syracuse 
and  Pulaski  station  to  the  terminus  of  the  Syracuse  and  Northern 
Eailroad  at  Washingtonville.  How  can  it  be  said  that  it  owed  a 
duty  to  the  public  to  do  this  over  the  direct  line  rather  than  over 
a  line  near  by  but  two  miles  longer?  There  is  no  allegation  that 
any  considerable  number  of  people  are  discommoded,  and  it  does 
not  appear  th^t  a  single  person  suffers  any  harm  except  that  pas- 
sengers are  obliged  to  change  cars  at  Eichland  rather  than  at  Wash- 
ingtonville station,  and  persons  taking  the  cars  at  Washingtonville 
station  to  go  southerly  are  obliged  to  travel  about  two  miles  farther. 
But  we  must  take  the  facts  as  stated  in  the  affidavits  of  the  defend- 
ant's manager,  read  in  opposition  to  the  application  for  the  writ, 
that  it  is  not  true  that  the  abandonment  of  this  small  section  of 
road  has  been  and  continues  to  be  a  matter  of  serious  damage  to 
the  people  of  the  State  of  New  York,  or  especially  to  that  portion 
of  the  people  of  the  State  who  are  residents  and  tax  payers  of  the 
town  of  Sandy  Creek,  but  that  the  present  line  operated  by  the  de- 
fendant between  Washingtonville  station  and  Pulaski  station  fur- 


460  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII. 

nishes  greatly  increased  facilities  to  the  people  of  the  State  of  New 
York  as  well  as  to  the  people  of  the  town  of  Sandy  Creek  above  those 
which  were  enjoyed  at  the  time  of  the  abandonment;  that  it  is  now 
far  more  convenient  for  the  people  of  that  town  to  reach  their  prin- 
cipal markets,  the  cities  of  Oswego,  Watertown,  Syracuse  and  Rome, 
than  at  any  previous  time,  and  that  their  railroad  service  is  alto- 
gether more  efficient  and  convenient  than  it  was  previous  to  the 
time  of  the  abandonment.  Under  such  circumstances  we  see  no 
reason  for  saying  that  the  interests  of  the  people  have  suffered 
from  this  abandonment,  or  that  any  considerable  number  of  the 
people  of  this  State  were  thereby  in  any  way  injured  or  inconven- 
ienced. If  a  few  individuals  were  discommoded,  or  private  inter- 
ests were  in  any  way  injured,  this  writ  is  not  the  proper  remedy 
for  such  evils. 

We  have,  with  great  care,  examined  and  considered  the  numerous 
authorities  cited  on  behalf  of  the  people  in  support  of  this  writ, 
but  we  find  none  which  justify  it.  Several  cases  were  cited  in 
which  it  was  held  that  a  railroad  company  could  be  compelled  by 
mandamus  to  operate  its  railroad  to  the  terminus  specified  in  its 
charter.  (Farmers'  Loan  and  Trust  Co.  v.  Henning  as  Eeceiver, 
etc.,  17  Am.  Law  Eeg.  [N.  S.]  266;  State  v.  H.  &  N.  H.  E.  E.  Co., 
29  Conn.  538;  Un.  Pac.  E.  E.  Co.  v.  Hall,  91  U.  S.  343;  King  v. 
S.  &  W.  E.  E.  Co.,  2  B.  &  ^d.  646 ;  People  v.  Albany  &  Vermont 
E.  E.  Co.,  24  ]Sr.  Y.  261.)  But  the  principles  of  those  cases  are 
not  controlling  in  this,  because  here  the  railroad  service  is  kept  up 
between  the  termini  of  the  Syracuse  and  Northern  Eailroad,  and 
the  public  duty  which  devolved  upon  it  at  its  organization  is  fully 
and  substantially  performed  by  the>  defendant.  The  present  line 
is  a  little  longer  than  the  one  originally  adopted  and  slightly  vary- 
ing therefrom,  but  it  accommodates  the  people  of  the  State  and  the 
people  q^f  the  locality  substantially  as  well  as  the  line  originally 
adopted.)  Suppose  two  roads  were  consolidated  and  the  lines  of 
the  two  between  two  places  were  parallel  and  near, to  each  other, 
could  the  consolidated  road  be  compelled  by  mandamus  to  operate 
both  lines,  or  could  it  discharge  its  duty  to  the  public  by  using  only 
one  line?  Suppose  the  New  York  Central  and  the  West  Shore 
roads,  as  their  lines  approach  the  city  of  Buffalo,  were  parallel  to 
and  near  each  other,  could  not  the  New  York  Central,  which  is  now 
substantially  the  owner  of  both  roads,  abandon  the  West  Shore  line, 
and  run  into  the  city  of  Bufi'alo  upon  the  New  York  Central  line  ? 
We  do  not  determine  that  in  all  cases  where  a  railroad  company 
which,  by  consolidation,  has  become  the  owner  of  two  lines  of  road 
between  two  termini,  and  running  through  different  sections  of 
country  and  different  cities  or  villages,  like  the  two  lines  between 


WITHDRAWAL   FROM    PUBLIC    SERVICE.  461 

Syracuse  and  Rochester,  could  abandon  either  of  its  lines,  because 
in  such  cases  it  might  well  be  that  the  public  interests  and  the  ac- 
commodation of  a  large  portion  of  the  people  of  the  State  required 
that  both  lines  should  be  operated ;  but  where  a  railroad  company 
owns  by  consolidation  two  lines  of  road,  and  can  substantially  ac- 
commodate the  people  of  the  State  by  operating  one  line  between 
the  same  points,  and  can  abandon  the  other  line  without  any  serious 
detriment  to  any  considerable  number  of  people,  we  do  not  believe 
it  should  be  compelled  by  mandamus  to  operate  both  lines  at  a  great 
sacrifice  of  money  upon  the  fanciful  idea  that  the  sovereignty  of 
the  State  is  wounded  by  its  omission  to  operate  both  lines. 

The  defendant  does  not  run  its  cars  at  any  point  where  it  has  not 
the  right  to,  and  it  does  not  exercise  any  franchise  which  it  is  not 
authorized  to.  It  accommodates  all  the  travel  and  traffic  which  the 
Syracuse  and  Northern  Eailroad  Company  was  required  to  accom- 
modate. That  road  still  has  a  connection  with  the  defendant;  and 
all  the  travel  and  traffic  over  it  can  still  commence  and  terminate  at 
Washingtonville.  There  is  no  public  right  to  protect  and  no  public 
duty  to  enforce  by  mandamus. 

We  are,  therefore,  of  opinion  that  the  orders  of  the  General  and 
Special  Terms  should  be  reversed,  and  the  application  for  a  per- 
emptory writ  of  mandamus  denied,  with  costs. 

All  concur,  except  Andrews,  J.,  who  takes  no  part,  and  Miller, 
J.,  absent. 

Ordered  accordingly.- 


EAST  OHIO  GAS  CO.  v.  CITY  OF  AKRON. 
81  Ohio  St.  33.     1909.^ 

Davis,  J.  This  case  was  orally  argued  and  submitted  six  months 
ago;  but,  on  account  of  its  great  importance  to  the  public  as  well 
as  to  all  public  service  corporations,  we  have  given  it  unusual  con- 
sideration, and  we  have  reached  our  conclusions  only  after  most 
careful  deliberation. 

The  chief  question  for  solution  here  is  whether  the  plaintiff  in 
error  may,  under  the  circumstances  disclosed  in  the  record,  discon- 
tinue the  furnishing  of  gas  to  the  city  of  Akron  and  its  inhabitants 

2  See  Commonwealth  v.  Fitchburg  R.  R.  Co.  (1858),  12  Gray.  180;  Moore 
V.  Brooklyn  City  R.  R.  Co.  (1888).  108  N.  Y.  98;  City  of  Potwin  Place  v. 
Topeka  Ry.  Co.  (1893),  .51  Kan.  G09. 

Compare  Ohio  &  M.  Ry.  Co.  v.  People  (1887),  120  111.  200:  Savannah  & 
O.  Canal  Co.  v.  Shuman  (1893),  91  Ga.  400;  State  v.  Dodge  City,  M.  &  T. 
Ry.  Co.    (1894),  53  Kan.  329. 

1  The  statements  of  facts,  arguments  of  counsel,  and  part  of  the  opinion 
are  omitted. —  Ed. 


462  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII, 

and  take  away  from  the  streets  its  mains  and  pipes,  and,  in  short, 
its  whole  plant. 

Whether  a  contract  for  the  privilege  of  entering  the  streets  of 
the  city  was  necessary  to  the  plaintilf  in  error,  or  whether  the  de- 
fendant in  error  was  competent  to  make  it,  is  immaterial  in  this 
case.  The  consent  of  the  city  for  that  purpose  was  granted  by  the 
ordinance,  and  it  was  accepted  by  the  gas  company;  but  no  stip- 
ulation was  made  and  accepted  as  to  the  time  when  the  use  of  the 
streets  for  the  purposes  of  the  gas  company  should  end.  The  lan- 
guage of  the  ordinance  is :  "  That  the  East  Ohio  Gas  Company,  its 
successors  and  assigns,  are  hereby  granted  the  right  to  enter  upon 
the  streets,  alleys  and  public  grounds  of  the  city  of  Akron,  Ohio, 
...  to  maintain,  operate,  repair  and  remove  mains  and  pipes  .  .  . 
together  with  the  right  to  construct  and  maintain,  repair  and  re- 
move all  necessary  regulators,"  etc.  .  Did  the  granting  of  this  priv- 
ilege or  right  and  its  acceptance  constitute  an  agreement  by  the  gas 
company  that,  having  entered  the  city,  it  should  remain  there  for- 
ever if  the  city  should  not  permit  it  to  withdraw?  The  logic  of 
the  defendant  in  error  would  seem  to  support  an  affirmative  answer 
to  this  question.  But,  if  the  company  enters  by  virtue  of  the  con- 
tract and  can  withdraw  only  by  consent  of  the  city,  then  the  con- 
tract lacks  mutuality ;  for  we  can  discover  no  corresponding  stipula- 
tion in  favor  of  the  company.  It  is  true  that  the  ordinance  grants 
the  right  to  enter  and  occupy  the  streets,  but  in  respect  to  the  time 
when  it  shall  terminate  its  occupancy  and  withdraw  the  ordinance 
is  silent.  May  we  infer  from  this  silence  that  the  gas  company  has 
a  perpetual  franchise  in  the  streets?  We  are  not  now  prepared  to 
hold  that  the  company  has  thus  acquired  such  a  perpetual  franchise ; 
and  we  feel  quite  sure  that  even  the  defendant  in  error,  on  more 
mature  reflection,  would  not  insist  upon  such  a  conclusion.  This 
court  laid  it  down  as  the  law,  in  Eailroad  Company  v.  Defiance, 
52  Ohio  St.  2C2,  307,  40  N.  E.  89,  100,  that :  "  Every  grant  in 
derogation  of  the  right  of  the  public  in  the  free  and  unobstructed 
use  of  the  streets,  or  restriction  of  the  control  of  the  proper  agencies 
of  the  municipal  body  over  them,  or  of  the  legitimate  exercise  of 
their  powers  in  the  public  interest,  will  be  construed  strictly  against 
the  grantee,  and  liberally  in  favor  of  the  public,  and  never  extended 
beyond  its  express  terms  when  not  indispensable  to  give  effect  to 
the  grant."  The  doctrine,  as  well  as  the  judgment,  in  this  case  was 
affirmed  in  Wabash  K.  E.  Co.  v.  Defiance,  167  U.  S.  88,  17  Sup.  Ct. 
748,  42  L.  Ed.  87.  The  same  rule  of  construction  was  approved 
and  followed  in  Blair  v.  Chicago,  201  TJ.  S.  400,  26  Sup.  Ct.  427, 
50  L.  Ed.  801,  and  in  Cleveland  Electric  Ey.  Co.  v.  Cleveland,  204 
U.  S.  116,  27  Sup.  Ct.  202,  51  L.  Ed.  399. 


WITHDRAWAL    FROM    PUBLIC    SERVICE.  463 

It  comes,  then,  to  this:  That,  in  the  absence  of  limitations  as 
to  time,  the  termination  of  the  franchise  is  indefinite,  and,  to  pre- 
serve mutuality  in  the  contract,  the  franchise  can  continue  only  so 
long  as  both  parties  are  consenting  thereto. 

This  is  in  accord  with  the  judgment  of  this  court  in  Gas  Light 
Co.  17.  Zanesville,  47  Ohio  St.  35,  23  N.  E.  60.     The  question  there 
was  whether  section  24T8,  Eev.  St.  1880,  could  be  applied  to  a  com- 
pany organized  under  the  old  Constitution  and  which  was  endeav- 
oring to  disconnect  its  pipes  from  the  street  lamps  and  city  build- 
ings, but  was  at  the  same  time  continuing  to  supply  the  private 
consumers  with  gas.     The  question  whether  the  gas  company  might 
wholly  quit  business  in  the  city,  and  withdraw  by  disconnecting 
and  taking  up  its  pipe  lines,  was  not  in  the  case  and  was  not  con- 
sidered.    A  reference  to  the  twin  case  of  Zanesville  v.  Gas  Light 
Co.,  47  Ohio  St.  1,  10,  23  N.  E.  55,  58,  will  disclose  the  fact  that,  by 
the  ordinance  under  which  the  Zanesville  Gas  Light  Company  ob- 
tained the  privilege  to  lay  its  pipes  in  the  streets  and  alleys  of 
Zanesville,  it  was  expressly  provided  that:     "The  Zanesville  Gas 
Light  Company  shall  during  such  time  as  they  enjoy  the  privileges 
granted  by  this  ordinance  supply  the  town  council  with  such  quan- 
tities of  gas  as  may  be  by  them  required  for  public  lamps  at  a  price 
not  exceeding,"  etc.     Therefore,  when  it  was  held  in  Zanesville  v. 
Gas  Light  Co.,  supi^a,  that  the  price  of  gas  might  be  controlled  by 
section  2478,  Eev.  St.  1880,  it  followed  as  held  in  Gas  Light  Co.  v. 
Zanesville,  supra.,  that,  if  the  gas  company  refused  to  obey  the  sec- 
ond ordinance  regulating  the  price,  it  might  be  compelled  by  man- 
datory injunction  to  do  so,  "  so  long  as  it  continues  to  exercise  and 
enjoy  its  franchises  as  a  gas  company,"  which  franchises  were  to 
be  a  gas  company  in  Zanesville  only.     If  the  East  Ohio  Gas  Com- 
pany were  insisting  upon  a  right  to  furnish  gas  to  some  of  its  pa- 
trons in  Akron  and  at  the  same  time  refusing  to  do  the  same  service 
to  others,  it  is  not  doubted  that  the  doctrine  of  the  Zanesville  case 
would  receive  great  consideration,  notwithstanding  that  the  orig- 
inal Akron  ordinance  does  not  contain  the  controlling  provision 
which  is  found  in  the  Zanesville  ordinance.     But  that  is  not  this 
case.^ 

2  See  Laighton  v.  City  of  Carthage   (1909),  17.5  Fed.  145. 

Compare  Selectmen  of  Amesbury  v.  Citizens  El.  St.  Ry.  Co.  (1908),  199 
Ma.ss.  394. 

In  Turnpike  Co.  v.  Illinois  (1877),  9G  U.  S.  63,  it  was  held  that  a  grant 
of  a  franchise,  without  expressing  any  length  of  time  for  which  it  should 
be  enjoyed,  should  be  considered  a  grant  for  the  life  of  the  corporation. 
In  People  v.  O'Brien  (1888),  111  N.  Y.  1,  such  a  grant  was  held  to  be  in 
perpetuity. 


464  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII. 


CITY    OF    GAINESVILLE    v.    GAINESVILLE    GAS    AND 
ELECTEIC  POWER  CO. 

65  Fla.  401.     1913.^ 

Whitfield,  J.  The  city  of  Gainesville  obtained  an  injunction 
restraining  the  Gas  &  Electric  Company  "  from  closing  down  or 
discontinuing  its  public  service  business  "  of  furnishing  electricity 
to  the  city  and  its  inhabitants.  A  demurrer  to  the  bill  of  com- 
plaint was  interposed.  This  appeal  is  from  an  order  "  that  the 
injunction  be  and  the  same  is  dissolved,  with  the  right  of  the  com- 
plainant to  amend  the  bill  in  ten  days  from  this  date  or  the  bill 
may  be  dismissed  without  prejudice  to  such  other  action  as  the 
complainant  may  be  advised  is  proper."  The  question  to  be  de- 
termined is  whether  there  was  error  in  dissolving  the  injunction. 

The  bill  of  complaint  alleges,  in  effect:  That  the  municipality 
has  all  the  usual  powers  of  cities  in  this  state,  and  is  authorized 
"  to  provide  for  the  lighting  of  the  streets  of  said  city  and  to  pro- 
vide for  the  lighting  of  the  said  city  by  gas  and  other  illuminating 
material  and  to  do  and  perform  all  such  other  acts  as  shall  seem 
necessary  and  best  adapted  to  the  improvement  and  general  inter- 
est of  said  city,  or  as  shall  be  necessary  for  the  health,  convenience 
and  safety  of  its  citizens ; "  that  a  charter  was  granted  by  the 
state  to  the  defendant  as  a  corporation,  authorizing  the  corporation 
to  exist  for  99  years  and,  among  other  things,  to  engage  in  the  busi- 
ness of  manufacturing,  generating,  and  selling  electric  current  for 
lighting  and  power  purposes ;  such  business  to  be  engaged  in  in  the 
city  of  Gainesville ;  that  thereafter  the  company  erected  "  and 
constructed  within  the  corporate  limits  of  said  city  of  Gainesville 
an  electric  lighting  and  power  plant  and,  by  and  with  the  permis- 
sion of  said  city  aforesaid,  erected  and  constructed  its  poles  and 
wire  for  the  distribution  of  electric  current  over  and  along  a  large 
number  of  the  streets  of  said  city,  and  from  that  date  until  the 
present  time  has  been  continuously  engaged  in  the  manufacture  and 
sale  of  electricity  for  illuminating  and  power  purposes." 

The  policy  of  the  law  is  to  require  by  mandatory  process  the  per- 
formance by  public  utility  corporations  of  their  duties  to  the  public. 
State  ex  rel.  Ellis  v.  Tampa  Waterworks  Co.,  57  Fla.  533,  text  539, 
48  South.  639,  22  L.  E.  A.  (N.  S.)  680. 

A  corporation  engaged  in  furnishing  electricity  to  a  municipality 
or  its  inhabitants  and  using  public  streets  or  exercising  other  fran- 
chises or  privileges  in  doing  so  is  thereby  performing  services  of 

1  Part  of  the  opinion  is  omitted. —  Ed. 


WITHDRAWAL   FROM    PUBLIC    SERVICE.  465 

a  public  nature,  within  the  meaning  of  the  Constitution  and  laws 
of  this  stale,  and  such  a  corporation  is  subject  to  lawful  govern- 
mental regulations  to  enforce  its  duties  to  the  public  it  undertakes 
to  serve.  Such  a  corporation  is  manifestly  a  "  public  service  "  or 
"  public  utility  "  corporation,  and  is  subject  to  the  rules  of  law  ap- 
plicable to  corporations  or  companies  engaged  in  performing  or 
rendering  service  of  a  public  nature.  See  1  Wyman,  Pub.  Ser. 
Cor.  §  113. 

As  the  gas  and  electric  company  had  received  and  accepted  from 
the  state  a  corporate  charter  authorizing  it  to  engage  in  the  busi- 
ness of  manufacturing,  generating,  and  selling  electric  current  for 
lighting  and  power  purposes  to  the  municipality  and  its  inhabi- 
tants, and  had  by  and  with  the  permission  of  the  city  constructed 
its  plant  using  the  streets  of  the  city  for  its  poles  and  wire  by  means 
of  which  the  public  service  of  furnishing  electric  current  to  the  city 
and  its  inhabitants  for  lighting  and  power  purposes  was  performed, 
for  which  the  company  was  entitled  under  the  Constitution  and  laws 
of  this  state  to  receive  a  reasonable  compensation  in  return  for  serv- 
ice rendered,  J:he  company  assumed  the  duty  imposed  by  implica- 
tion of  law  to  render  a  reasonably  adequate  service  during  the  time 
its  rights  and  duty  may  lawfully  continue,  and  such  duty  may  be 
enforced  where  no  adequate  excuse  for  nonperformance  is  appropri- 
ately known.^  See  Gas  Ljght  Co.  v.  Zanesville,  47  Ohio  St.  35,  23 
K.  E.  60.  An  express  contract  is  not  essential  to  establish  recipro- 
cal rights  between  a  publiq  service  company  and  the  public  it  under- 
takes to  serve.  Such  rights  arise  by  implication  of  law.  See  State 
ex  rel.  Ellis  v.  Atlantic  Coast  Line  R.  Co.,  53  Fla.  650,  44  South, 
213,  13  L.  R.  A.  (N.  S.)  320,  12  Ann.  Cas.  359. 

The  defense  undertaken  to  be  shown  when  the  injunction  was 
dissolved  is  in  substance  that  the  ordinances  passed  by  the  city 
regulating  the  company's  service  and  compensation  are  in  effect 
confiscatory  and  unduly  arbitrary  and  burdensome  to  the  company. 
This  is  not  a  sufficient  reason  for  a  discontinuance  of  the  public 
service.  While  it  is  the  duty  of  the  company  to  observe  all  lawful 
municipal  regulations,  the  company  has  a  right  to  receive  a  rea- 
sonable compensation  for  the  public  service  it  renders  to  the  city 
and  its  inhabitants  and  to  the  equal  protection  of  the  laws  in  every 
department  of  the  government.  '-If  the  regulations  imposed  by  the 
city  are  in  law  and  in  fact  illegal  for  any  reason,  the  company  has 
its  complete  and  adequate  remedy  by  appropriate  proceedings ;  but 
the  company,  being  engaged  in  rendering  a  public  service,  must 
continue  to  do  so  in  a  reasonably  adequate  manner  until  relieved 
of  its  duty  by  due  process  of  law.  Illegal  municipal  regulations 
are  not  binding;  but  persons  and  corporations  cannot  be  permitted 


466  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII. 

to  arbitrarily  assume  to  remedy  an  alleged  wrong  by  refusing  to 
render  a  public  service  voluntarily  undertaken.  The  service  to  the 
public  must  be  performed,  and  the  law  will  upon  proper  proceed- 
ings enforce  the  right  to  reasonable  compensation  for  service  ren- 
dered. An  ordinary  action  at  law  would  not  afEord  an  adequate 
remedy  to  the  public.  Under  the  liberal  rules  of  procedure  recog- 
nized in  this  state,  the  company  may  by  cross-bill  or  other  ap- 
propriate steps  secure  a  determination  and  enforcement  of  its  right 
to  reasonable  compensation  and  to  equal  protection  of  the  laws. 

The  decree  dissolving  the  injunction  is  reversed,  and  the  cause 
is  remanded,  with  directions  to  retain  the  bill  of  complaint  for  the 
purposes  of  appropriate  injunction  orders,  with  leave  to  the  de- 
fendant company  by  cross-bill  or  other  procedure  to  test  the  validity 
of  the  municipal  regulations  of  which  it  complains." 

Shackleford,  C.  J.,  and  Taylor,  Cockrell,  and  Hocker,  JJ., 
concur. 


CUMBEELAND    TELEPHONE    AND    TELEGEAPH    CO.    v. 
CITY  OF  EVANSVILLE. 

127  Fed.   187.     1903/ 

Anderson,  District  Judge.  It  is  alleged  in  the  bill  that  prior 
to  December,  1882,  the  Evansville  Telephone  Exchange  was  organ- 
ized under  the  laws  of  the  state  of  Indiana  "  for  the  purpose  of  con- 
ducting a  telephone  business  in  the  city  of  Evansville,  Indiana  " ; 
that  on  December  11,  1883,  said  Evansville  Telephone  Exchange 
made  application  to  the  common  council  of  the  city  of  Evansville 
for  a  permission  or  grant  to  occupy  the  streets,  alleys,  and  public 
places  in  the  city  in  order  to  erect  its  poles  and  string  its  wires  for 
use  in  its  telephone  system,  and  on  December  28,  1882,  an  ordi- 
nance was  duly  passed  by  said  common  council  granting  such  right 
to  said  telephone  exchange,  its  successors  and  assigns;  that  thei^e- 
upon  said  telephone  exchange,  pursuant  to  such  grant,  erected  and 
established  a  telephone  system  in  said  city,  and  on  July  1,  1883, 
had  527  subscribers  who  were  receiving  service  from  said  exchange; 
that  on  June  30,  1883,  complainant  purchased  of  the  Evansville 
Telephone  Exchange  its  telephone  plant  in  the  city  of  Evansville, 
together  with  all  poles,  wires,  exchange  equipment,  and  other  ap- 

2  See  Matter  of  Wheeler  (1909),  02  Misc.  (N.  Y.)  37,  with  which  com- 
pare Carter  v.  Commonwealth  (1823),  2  Va.  Cas.  3.54. 

With  regard  to  the  question  whether  injunction  is  the  proper  form  of 
action,  see  Germania  Ref.  Co.  v.  Alum  Rock  Gas  Co.  (1910),  226  Pa.  St. 
433. 

1  Only  the  statement  of  the  pleadings  is  here  reprinted  from  the  opinion 
delivered  upon  the  trial. —  Ed. 


WITHDRAWAL    FROM    PUBLIC    SERVICE.  467 

pliances,  and  also  the  right  and  permission  given  by  the  common 
council  of  said  city  to  operate  said  exchange  in  said  city ;  that  com- 
plainant immediately  took  possession  of  said  property,  and  lias  been 
in  possession  and  enjoyment  thereof  continuously  to  the  present 
time,  and  has  continuously  since,  without  cessation,  operated  said 
exchange  under  said  ordinance;  that  the  passage  of  the  said 
ordinance  of  1883  and  its  acceptance  by  the  Evansville  Telephone 
Exchange  constituted  a  contract  between  the  city  and  the  Evansville 
Telephone  Exchange,  which  was  duly  and  properly  acquired  by 
complainant,  and  that  complainant  thereby  acquired  vested  rights 
to  the  use  of  the  streets  and  alleys  of  the  city  of  Evansville  for  the 
erection  and  maintenance  of  its  poles  and  wires  used  in  the  opera- 
tion of  its  telephone  plant  in  said  city,  which  cannot  lawfully  be 
interfered  with ;  (that  defendant  has  ordered  and  directed  com- 
plainant to  remove  all  telephones  furnished  by  it  to  the  city,  and 
to  remove  from  the  streets,  alleys,  and  public  places  and  property 
of  said  city  all  poles,  wires,  cables,  fixtures,  and  appliances  of  any 
kind  of  complainant  which  are  now  in  or  upon  said  streets,  alleys, 
public  places,  and  property  of  said  city;  and  complainant  seeks 
to  enjoin  the  defendant  from  interfering  with  the  property  or  busi- 
ness of  complainant  in  said  city  and  from  interfering  in  any  man- 
ner with  its  right  to  erect  and  maintain  its  poles  and  wires  in  the 
streets,  alleys,  and  public  places  of  the  city,  or  with  its  vested  rights 
in  said  city.  The  bill  is  quite  lengthy,  and  contains  many  other 
matters  besides  those  recited  above,  (but  by  it  complainant  claims 
the  right  to  remain  and  do  business  in  the  city  by  virtue  of  the 
ordinance  granted  by  said  city  to  said  the  Evansville  Telephone  Ex- 
change on  December  28,  1883,  and  by  said  exchange  assigned  and 
transferred  to  complainant  in  June,  1883.) 

(The  answer,  among  other  things,  alleges  that  the  attempted  sale 
and  transfer  by  the  Evansville  Telephone  Exchange  to  the  com- 
plainant of  all  its  property  of  every  kind,  including  its  rights  and 
franchises,  was  illegal  and  void  because  it  was  beyond  and  outside 
of  the  powers  granted  to  said  telephone  exchange,  and  contrary  to 
public  policy ;  that,  the  attempted  sale  and  transfer  of  all  its  prop- 
erty being  absolutely  void,  complainant  has  no  right  or  title  to  the 
same  by  reason  of  such  sale  and  transfer,  and  therefore  cannot 
claim  the  protection  of  a  court  of  equity  for  such  property. 

On  Petition  for  a  Eehearing. 

(January  33,   1904.) 

Anderson,  District  Judge.     The  complainant  has  filed  a  peti- 
tion for  a  rehearing  of  this  cause,  and  in  support  thereof  has  filed 


468  WITHDRAWAL    FROM    PUBLIC    SERVICE.  [CHAP.    VII. 

a  brief  which  warrants  some  attention.  It  is  correctly  stated  in 
this  brief  that  "  the  only  piece  of  property  involved  in  this  suit  is 
the  '  easement '  created  under  the  1882  ordinance,"  and  assigned 
to  complainant,  and  that  "  the  sole  property  right  in  suit  is  this 
easement."  The  question  now  is,  did  the  complainant,  by  the  sale 
alleged  and  proved  in  this  case,  acquire  a  right  in  or  title  to  the 
easement  which  it  can  assert  in  a  court  of  justice?  In  their  brief 
counsel  for  complainant  treat  the  contract  upon  which  they  base 
complainant's  title  to  the  "  easement "  as  ultra  vires  the  Evansville 
Telephone  Exchange,  and  in  that  respect  void.  But  this  view  is 
too  narrow.  The  contract  was  void  also  because  it  was  contrary 
to  public  policy.)  In  Thomas  v.  Eailroad  Company,  101  U.  S.  71, 
83,  25  L.  Ed.  950,  the  court  said : 

"  There  is  another  principle  of  equal  importance  and  equally 
conclusive  against  the  validity  of  this  contract,  which,  if  not  com- 
ing exactly  within  the  doctrine  of  ultra  vires,  as  we  have  just  dis- 
cussed it,  shows  very  clearly  that  the  railroad  company  was  without 
the  power  to  make  such  a  contract.  (That  principle  is  that  where 
a  corporation  like  a  railroad  company  has  granted  to  it  by  charter 
a  franchise  intended  in  large  measure  to  be  exercised  for  the  public 
good,  the  due  performance  of  those  functions  being  the  considera- 
tion of  the  public  grant,  any  contract  which  disables  the  corporation 
from  performing  those  functions  which  undertakes,  without  the 
consent  of  the  state,  to  transfer  to  others  the  rights  and  powers 
conferred  by  the  charter,  and  to  relieve  the  grantees  of  the  burden 
which  it  imposes,  is  a  violation  of  the  contract  with  the  state,  and 
is  void  as  against  public  policy." 

In  Central  Transportation  Company  v.  Pullman's  Company,  139 
U.  S.  24,  11  Sup.  Ct.  478,  35  L.  Ed.  55,  it  is  said: 

"  The  necessary  conclusion  from  these  premises  is  that  the  con- 
tract sued  on  was  unlawful  and  void,  because  it  was  beyond  the 
powers  conferred  upon  the  plaintiff  by  the  Legislature,  and  be- 
cause it  involved  an  abandonment  by  the  plaintiff  of  its  duty  to 
the  public." 

In  Pullman's  Car  Co.  v.  Transportation  Co.,  171  U.  S.  138,  149, 
18  Sup.  Ct.  808,  43  L.  Ed.  108,  the  court  said : 

"  The  so-called  lease  mentioned  in  this  case  has  been  already 
pronounced  illegal  and  void  by  this  court.  139  U.  S.  24  [11  Sup. 
Ct.  478,  35  L.  Ed.  55].  The  contract  or  lease  was  held  to  be  un- 
lawful and  void  because  it  was  beyond  the  powers  conferred  upon 
the  Central  Company  by  the  Legislature,  and  because  it  involved 
an  abandonment  by  that  company  of  its  duty  to  the  public." 

Complainant's  counsel  confuse  the  words  "  void "  and  "  void- 
able."    Such  confusion  has  frequently  occurred  in  statutes  and  de- 


WITHDRAWAL   FEOM   PUBLIC    SERVICE.  469 

cisions  of  courts,  but  in  the  cases  cited  in  the  original  opinion 
herein  the  Supreme  Court  of  the  United  States  used  the  word 
"  void  "  in  its  strict  and  proper  sense ;  and  in  the  case  of  Central 
Tranportation  Co.  v.  Pullman's  Co.,  supra,  in  the  paragraph 
quoted  in  the  original  opinion,  the  court  held  the  contract  in  that 
case  to  be  "  not  voidable  only,  but  wholly  void,  and  of  no  legal  ef- 
fect." "  Contracts  to  do  acts  that  are  illegal,  criminal,  or  con- 
trary to  public  policy  .  .  .  are  absolutely  void."  Am,  &  Eng. 
Ency.  of  Law,  vol.  28,  p.  477. 

In  Anderson  v.  Koberts,  18  Johns.  527,  9  Am.  Dec.  235,  it  is  said : 

"  A  thing  is  void  which  is  done  against  law  at  the  very  time  of 
doing  it,  and  when  no  person  is  bound  by  the  act;  but  a  thing  is 
voidable  which  is  done  by  a  person  who  ought  not  to  have  done  it, 
but  who  nevertheless  cannot  avoid  it  himself  after  it  is  done." 

In  Thomas  v.  Railroad  Co.,  supra,  the  court  not  only  holds  that 
the  company  entering  into  the  contract  in  that  case  had  the  right 
to  repudiate  the  contract,  but  that  "  it  was  the  duty  of  the  company 
to  rescind  or  abandon  it  at  the  earliest  moment."  And  this  be- 
cause the  contract  was  against  the  law ;  forbidden  by  public  policy. 

I  think  the  contract  which  is  the  foundation  of  complainant's 
alleged  title  is  absolutely  void.  "  Strictly  speaking,  '  void  '  means 
without  legal  efficacy;  ineffectual  to  bind  parties  or  to  convey  or 
support  a  right."  28  Am.  &  Eng.  Ency.  of  Law,  473.  No  right 
can  be  founded  on  an  absolutely  void  act.  "  Whatever  may  be 
avoided,  may,  in  good  sense,  to  this  purpose,  be  called  void;  and 
this  use  of  the  word  ^  void '  is  not  uncommon  in  the  language  of 
statutes  and  of  courts.  But  in  regard  to  the  consequences  to  third 
persons  the  distinction  is  highly  important,  because  nothing  can  be 
founded  on  what  is  absolutely  void,  whereas  from  those  which  are 
only  voidable  fair  titles  may  flow."  Somes  v.  Brewer,  2  Pick. 
(Mass.)  184,  13  Am.  Dec.  406.  Complainant  is  in  this  position: 
It  claims  title  by  virtue  of  a  contract  which  is  absolutely  void  be- 
cause in  violation  of  positive  law,  and  it  asks  this  court  to  recog- 
nize and  protect  a  title  thus  acquired.  "  No  court  of  justice  can, 
in  its  nature,  be  made  the  handmaid  of  iniquity."  U.  S.  Bank  v. 
Owens,  2  Pet.  538,  7  L.  Ed.  508.  Lord  Mansfield,  in  Holman  v. 
Johnson,  Cowp.  341,  stated  the  ground  on  which  courts  proceed 
in  such  cases,  as  follows : 

"  The  principle  of  public  policy  is  this :  '  Ex  dolo  malo  non 
oritur  actio.'  No  court  will  lend  its  aid  to  a  man  who  founds  his 
cause  of  action  upon  an  immoral  or  an  illegal  act.  If,  from  the 
plaintiff's  own  stating  or  otherwise,  the  cause  of  action  appear  to 
arise  ex  turpi  causa,  or  the  transgression  of  a  positive  law  of  this 
country,  then  the  court  says  he  has  no  right  to  be  assisted.     It  is 


470  WITHDRAWAL   FROM   PUBLIC    SERVICE.  [CHAP.    VII. 

upon  that  ground  the  court  goes,  not  for  the  sake  of  the  defendant, 
but  because  they  will  not  lend  their  aid  to  such  a  plaintiff." 

In  Gibbs  v.  Baltimore  Gas  Co.,  130  U.  S.  396,  410,  9  Sup.  Ct. 
553,  32  L.  Ed.  979,  the  court  quotes  from  Bishop  on  Contracts : 

"  The  law  cannot  recognize  as  valid  any  undertaking  to  do  what 
fundamental  doctrine  or  legal  rule  directly  forbids.  Nor  can  it 
give  effect  to  any  agreement  the  making  whereof  was  an  act  violat- 
ing law." 

In  Pullman's  Car  Co.  v.  Transportation  Co.,  171  U.  S.  138,  151, 
18  Sup.  Ct.  808,  43  L.  Ed.  108,  after  citing  with  approval  the  case 
of  Holman  v.  Johnson,  1  Cowp.  341,  and  many  other  cases,  the 
court  said: 

"  They  are  substantially  unanimous  in  expressing  the  view  that 
in  no  way  and  through  no  channels,  directly  or  indirectly,  will 
the  courts  allow  an  action  to  be  maintained  for  the  recovery  of 
property  delivered  under  an  illegal  contract,  where,  in  order  to 
maintain  such  recovery,  it  is  necessary  to  have  recourse  to  that  con- 
tract. The  right  of  recovery  must  rest  upon  a  disaffirmance  of  the 
contract,  and  it  is  permitted  only  because  of  the  desire  of  the 
courts  to  do  justice  as  far  as  possible  to  the  party  who  has  made 
payment  or  delivered  property  under  a  void  agreement,  and  which 
in  justice  he  ought  to  recover.  But  courts  will  not,  in  such  en- 
deavor, permit  any  recovery  which  will  weaken  the  rule  founded 
upon  the  principles  of  public  policy  already  noticed." 

How  can  complainant  claim  the  protection  of  this  court  for  its 
alleged  title  to  this  easement  without  having  recourse  to  the  con- 
tract by  which  it  claims  to  have  acquired  that  title  ?  ^  To  grant  the 
relief  sought  by  complainant  is  to  both  recognize  and  enforce  a  con- 
tract which  the  law  declares  to  be  absolutely  void ;  void  because  of 
want  of  power  to  make  it,  and  void  because  contrary  to  public  pol- 
icy. ; 

It  is  insisted  that  the  city  of  Evansville  occupies  the  position  of 
a  third  person  or  stranger  to  this  contract,  and  therefore  it  cannot 
raise  the  question  as  to  its  validity.  As  the  authorities  cited  above 
show,  if  this  contract  is  absolutely  void,  it  is  void  as  to  everybody, 
and  is  a  nullity  whenever  or  wherever  it  is  set  up.  The  right  as- 
serted here  by  complainant  is  the  right  to  use  the  streets,  alleys, 
and  public  places  of  the  city.  The  regulation  and  control  of  this 
use  is  by  law  vested  in  the  city.  The  complainant  is  asserting  the 
right  to  this  use  against  the  city,  which  now  has  control  of  the 
right,  unless  it  has  granted  it  to  a  corporation  which  has  legally 
assigned  it  to  conrplainant.  It  would  be  strange,  indeed,  if  in 
such  case  the  city  could  not  question  the  validity  of  such  assign- 
ment. 


WITHDRAWAL    FROM    PUBLIC    SERVICE.  471 

But  it  is  the  duty  of  courts  to  refuse  recognition  to  an  illegal 
contract  whenever  and  however  its  illegality  appears.  A  court  is, 
in  the  due  administration  of  justice,  bound  to  refuse  its  aid  to  en- 
force an  illegal  contract,  even  if  its  invalidity  be  not  pleaded.  Os- 
canyan  v.  Arms  Co.,  103  U.  S.  261,  26  L.  Ed.  539.  A  party  to 
the  contract  cannot  waive  its  invalidity.  In  Hall  v.  Coppell,  7 
Wall.  542,  559,  19  L.  Ed.  244,  Mr.  Justice  Swayne,  speaking  for 
the  court,  said: 

"  The  instruction  given  to  the  jury  that,  if  the  contract  was 
illegal,  the  illegality  had  been  waived  by  the  reconventional  demand 
of  tJie  defendants,  was  founded  upon  a  misconception  of  the  law. 
In  such  cases  there  can  be  no  waiver.  The  defense  is  allowed,  not 
for  the  sake  of  the  defendant,  but  of  the  law  itself.  The  principle 
is  indispensable  to  the  purity  of  its  administration.  It  will  not 
enforce  what  it  has  forbidden  and  denounced.  The  maxim,  '  Ex- 
dolo  malo  non  oritur  actio,'  is  limited  by  no  such  qualification. 
The  proposition  to  the  contrary  strikes  us  as  hardly  worthy  of  seri- 
ous refutation.  Whenever  the  illegality  appears,  whether  the  evi- 
dence comes  from  one  side  or  the  other,  the  disclosure  is  fatal  to 
the  case.  No  consent  of  the  defendant  can  neutralize  its  effect. 
A  stipulation  in  the  most  solemn  form  to  waive  the  objection  would 
be  tainted  with  the  vice  of  the  original  contract,  and  void  for  the 
same  reasons.  Wherever  the  contamination  reaches,  it  destroys. 
The  principle  to  be  extracted  from  all  the  cases  is  that  the  law 
will  not  lend  its  support  to  a  claim  founded  upon  its  violation." 

In  order  to  establish  its  claim  to  the  right  sought  to  be  protected 
in  this  case,  complainant  alleged,  and  it  was  necessary  for  it  to 
prove,  the  contract  out  of  which  its  alleged  right  springs.  In  this 
way,  and  in  this  way  alone,  can  it  establish  the  right  alleged  in  the 
bill.  In  McMullen  v.  Hoffman,  174  U.  S.  639,  654,  19  Sup.  Ct. 
839,  43  L.  Ed.  1117,  the  Supreme  Court  said: 

^The  authorities,  from  the  earliest  time  to  the  present,  unani- 
mously hold  that  no  court  will  lend  its  assistance  in  any  way  towards 
carrying  out  the  terms  of  an  illegal  contract.  In  case  any  action 
is  brought  in  which  it  is  necessary  to  prove  the  illegal  contract 
in  order  to  maintain  the  action,  courts  will  not  enforce  it,  nor  will 
they  enforce  any  alleged  rights  directly  springing  from  such  con- 
tract." 

The  petition  to  rehear  is  overruled.^ 

2  See  Abbott  v.  .Tohnston,  G.  &  K.  H.  R.  R.  Co.  (1880).  80  N.  Y.  27; 
McCarter  r.  Vineland  L.  &  P.  Co.  (1907),  72  N.  J.  Eq.  767;  Oregon  v. 
Portland  Gen.  El.  Co.    (1908),  52  Ore?.  502. 

Compare  Plummer  v.  Chesapeake  &  O.  Ry.  Co.  (1911),  143  Ky.  102; 
Attorney  General  v.  Haverhill  G.  L.  Co.   (1913),  215  Mass.  394. 


472  WITHDRAWAL    FROM    PUBLIC    SERVICE.  [CHAP.    VII, 


LUSBY  V.  KANSAS  CITY,  MEMPHIS  AND  BIRMINGHAM 
RAILROAD  CO. 

73  Miss.  3G0.     1895.^ 

Woods,  J.  This  action  was  instituted  by  the  appellant  in  the 
circuit  court  of  Monroe  county  for  the  recovery,  in  one  of  the 
counts  of  the  declaration,  for  actual  damages,  and,  in  the  other 
count,  for  the  statutory  penalty  for  trespass  in  cutting  trees  upon 
appellant's  land.  The  count  for  the  actual  damages  was,  by  the 
appellant,  dismissed  in  the  court  below,  whereby  the  right  to  re- 
cover the  statutory  penalty  for  the  cutting  of  trees  was  left  as  the 
sole  issue  to  be  determined. 

Brushing  aside  all  the  mere  forms  of  pleadings  adopted  by  the 
parties  in  reaching  and  raising  this  issue,  we  state  at  once  the  de- 
fense set  up  by  the  appellee,  which  was,  and  is,  in  a  word,  that 
because  of  certain  other  suits,  begun  by  the  appellant  and  others, 
against  appellee,  to  recover  for  injuries  sustained  by  them  in  the 
flooding  of  their  lands  and  destroying  their  crops,  and  because,  as 
alleged  by  them  in  their  complaints,  of  the  improper  construction 
of  appellee's  line  of  railway,  it  became,  in  the  judgment  of  appellee, 
necessary  to  make  fresh  surveys  over  appellant's  lands,  with  a  view 
to  a  change  and  relocation  of  said  line,  if,  after  such  surveys,  it 
should  appear  to  be  necessary  to  reconstruct  or  relocate  its  line  of 
railway,  and  this  right  to  resurvey  and  change  and  relocate  is  as- 
serted to  be  contained  in  the  grant  of  its  powers  contained  in  the 
charter. 

It  thus  appears  that  the  great,  underlying  question  presented  is, 
was  the  original  selection  and  location  of  the  route,  and  the  actual 
construction  of  the  railroad  in  its  entirety,  many  years  ago,  final, 
and  was  the  power  to  exercise  the  right  of  eminent  domain  ex- 
hausted by  the  one  exercise  of  it,  in  such  original  selection  and  loca- 
tion of  the  route  and  the  actual  construction  of  the  road? 

In  no  part  of  the  charter,  either  as  recited  by  us  or  elsewhere, 
is  there  to  be  found  any  express  grant  of  any  powers  to  reselect  or 
relocate  the  line  after  the  most  advantageous  route  has  been  once 
adopted,  nor  any  hint  of  power  conferred  to  change  the  route 
shown  to  have  been  located  and  selected  by  the  map  required  to  be 
filed  in  the  office  of  the  secretary  of  state,  and  to  reconstruct  the 
line,  in  whole  or  in  part,  on  any  other  route,  slightly  or  widely 
different  and  distant  from  the  original  line  of  selection  and  loca- 
tion, and  actual  construction  of  the  road.     If  any  such  power  to 

1  Arguments  of  counsel  and  part  of  the  opinion  are  omitted. —  Ed, 


WITHDRAWAL   FROM    PUBLIC    SERVICE.  473 

relocate  and  reconstruct  can  be  successfully  asserted  by  the  cor- 
poration, resort  must  be  had  to  the  doctrine  of  implied  powers. 
fit  will  be  well  to  recur,  for  a  moment,  to  first  principles,  and  re- 
ntind  ourselves  that  all  grants  of  power  —  and  preeminently  grants 
of  powers  of  sovereignty  —  to  private  corporations  are  to  be  strictly 
construed;  that  every  doubt  as  to  the  proper  construction  of  every 
such  grant  is  to  be  resolved  against  the  grantee ;  jand  that,  to  quote 
the  language  of  the  great  English  judge,  widely  borrowed  and  ap- 
proved, "silence  is  negation."  Thus  guarded,  it  may  be  safely 
and  wisely  conceded  that  one  original  act  of  selection,  location,  and 
construction  would  not  exhaust  the  power  to  exercise  the  right  of 
eminent  domain  in  those  two  exceptional  classes  of  cases  where  a 
subsequent  exercise  of  the  right  is  shown  clearly  to  be  necessary 
to  subserve  the  very  ends  for  which  the  corporation  was  created. 
The  first  of  these  classes  recognized  by  us  in  Ewing  v.  Eailway  Co., 
68  Miss.  551,  9  South.  295,  and  recognized  by  courts  generally,  are 
cases  in  which  the  ends  of  the  corporation's  being  imperatively  re- 
quired, not  a  second  condemnation  of  a  new  line,  and  the  reloca- 
tion and  reconstruction  of  another  and  different  line  of  railway, 
but  the  securing  of  additional  terminal  facilities  for  turntables, 
sidetracks,  water  tanks,  station  houses,  etc.  Eeferring  to  cases  of 
this  character,  we  said  in  that  case :  "  We  do  not  forget  that  grants 
of  power,  of  the  character  under  consideration,  are  to  be  strictly 
construed.  But  that  is  not  a  strict  construction  which  denies  to 
the  agency  created  the  very  means  which  are  indispensable  to  the 
accomplishment  of  the  ends  of  the  creation.  That  is  the  destruc- 
tion of  the  agency,  and  not  a  construction  of  the  grant  of  the  powers 
conferred." 

The  second  class  of  exceptional  cases  arises  when,  not  by  con- 
sideration of  the  corporation's  convenience,  or  of  economy  in  the  ex- 
penditure of  its  moneys,  or  of  a  more  advantageous  location,  and 
reconstruction  on  a  new  and  different  line,  but  by  imperious  neces- 
sity, some  change  of  the  line  must  be  made,  or  the  road  abandoned, 
and  the  ends  of  its  creation  fail  of  fulfillment  because  of  some  insur- 
mountable obstacle  interposed  by  nature  to  the  further  operation 
of  the  road  on  its  original  line.  If  some  appalling  cataclysm 
should  swallow  in  a  yawning  chasm  the  right  of  way,  roadbed,  and 
track,  and  leave  a  bridgeless  gulf  where  solid  earth  had  been,  then, 
in  this  and  other  like  cases,  the  deviation  of  the  line  from  its  orig- 
inal location  would  be  within  the  implied  powers  of  the  charter, 
because  to  relocate  and  reconstruct  to  the  extent  indicated  would 
be  absolutely  necessary  in  order  to  the  accomplishment  of  the  ends 
for  which  the  corporation  was  created. 

But  these  classes  of  cases  do  not  embrace  the  case  presented  by 


474  WITHDRAWAL    FROM    PUBLIC    SERVICE.  [CHAP.    VII. 

the  present  appeal.  Here,  in  the  case  at  hand,  no  uncontrollable 
and  not  to  be  foreseen  convulsion  of  the  earth  had  rendered  the 
continued  use  of  the  line  impossible,  nor  was  there  any  overpower- 
ing necessity  which  required  a  new  location  and  reconstruction  of 
the  road.  It  does  not  appear  that,  as  originally  located  and  con- 
structed, the  line  was  not,  as  the  selection  and  location  by  appellee 
declared  it  to  be,  by  its  original  action,  the  most  advantageous 
route.  But,  if  the  location  was  not  the  most  advantageous,  and  if 
damage  had  resulted  to  lands  and  crops  by  reason  of  improper  loca- 
tion, yet  we  are  at  a  loss  to  conjecture  why  sufficient  culverts, 
trestles,  and  bridges  for  the  passage  of  the  flood  waters  would  not 
have  prevented  such  damage,  and,  in  addition,  and  chiefly,  the  cor- 
poration, having  once  made  its  election,  and  constructed  and  for 
years  used  its  road  according  to  such  election,  is  bound  thereby. 
Having  elected  to  take  its  original  route,  such  election  is  final,  and 
no  change,  from  motives  of  convenience  or  expediency  or  economy, 
could  be  made,  without  another  legislative  grant  authorizing  the 
change. 

It  would  be  amazing,  if  any  high  authority  could  now  be  found, 
holding  that  a  corporation,  under  such  a  charter  as  that  of  appellee, 
could  continue  indefinitely  to  exercise  the  state's  sovereign  right  of 
eminent  domain  whenever  and  wherever  it  would  be  more  advan- 
tageous to  it  to  change,  relocate,  and  reconstruct  an  established  and 
long-used  line  of  railway,  than  to  stand  by  its  original  selection, 
location,  and  construction.  In  a  few  earlier  cases  there  are  inti- 
mations not  in  harmony,  apparently,  with  the  views  we  have  ad- 
vanced. Perhaps  the  case  most  cited  for  the  false  view  is  that  of 
Railroad  Co.  v.  Devaney,  in  the  book  entitled  42  Miss,  at  page  555. 
The  case  has  no  binding  authority  upon  us,  nor  does  the  doctrine 
of  stare  decisis  have  any  application  in  the  case  referred  to,  nor  in 
any  other  case  found  in  the  so-called  43  Miss.  The  opinions  found 
in  that  volume  are  the  utterances  of  a  tribunal  appointed  by  the 
military  satrap,  who  then  ruled  in  a  prostrate  commonwealth,  and 
have  no  other  binding  authority  upon  us  than  that  each  case  therein 
must  be  regarded  as  re.s  adjudicata. 

In  that  case,  an  unsuccessful  railroad  company  having  had  a 
bridge  burned  across  a  small  stream,  the  Yallobusha  river  by  name, 
and  having  no  money  (a  very  common  condition  with  men,  and  not 
wholly  unknown  with  corporations)  with  which  to  build,  abandoned 
its  line,  long  before  located  and  constructed  and  operated,  seized 
Devaney's  lands,  to  the  extent  of  a  right  of  way,  changed  the  loca- 
tion of  its  once-selected  and  long-used  line,  and  all  on  the  ground 
of  its  poverty, —  its  want  of  funds  to  rebuild  its  burned  bridge; 
and  the  tribunal  of  military  appointment  held  that  there  was  mani- 


WITHDRAWAL    FROM    PUBLIC    SERVICE.  475 

fest  necessity,  requiring  a  change  of  location  and  reconstruction 
of  the  railway  line.  The  opinion  is  unsound,  mischievous,  and  at 
war  with  reason  and  authority. 

In  turning  to  the  text  writers  and  decided  cases  which  hold  that, 
where  the  road  has  been  once  located  and  constructed,  in  the  ex- 
ercise of  the  discretion  allowed  its  promoters  by  cliarter,  or  by  gen- 
eral law,  the  power  of  exercising  the  right  of  eminent  domain  is 
at  an  end,  and  that  no  second  choice  can  be  made,  or  any  differ- 
ent line  selected,  unless  expressly  authorized  by  statute,  the 'array 
is  multitudinous.  Time  fails  us  in  any  citations  from  them,  and 
we  content  ourselves  by  a  simple  reference  to  some  of  them.  See 
Mills,  Em.  Dom.  58;  Eand.  Em.  Dom.  160;  Pierce,  E.  E.  254;  2 
Wood,  Ey.  Law,  p.  752 ;  Society  v.  Hosmer,  12  Conn.  361 ;  State  v. 
Xew  Haven  &  Northampton  Co.,  45  Conn,  331;  Providence  & 
AY.  E.  Co.,  Petitioner,  17  E.  I.  324,  21  Atl.  965;  Brigham  v.  Eail- 
road  Co.,  1  Allen,  316;  Mason  v.  Eailroad  Co.,  35  Barb.  373;  In  re 
Poughkeepsie  Bridge  Co.,  108  N.  Y.  483,  15  N.  E.  601 ;  Hudson  & 

D.  Canal  Co.  v.  New  York  &  E.  E.  Co.,  9  Paige,  323 ;  Morris,  etc., 

E.  Co.  V.  Central  E.  Co.,  31  N.  J.  Law,  205;  Morrow  v.  Com.  48  Pa. 
St.  305;  Com.  v.  Pittston  Ferry  Bridge  Co.,  148  Pa.  St.  621,  24 
Atl.  87 ;  Moorhead  v.  Little  Miami  E.  Co.,  17  Ohio,  340 ;  Atkinson 
V.  Eailroad  Co.,  15  Ohio  St.  21;  Kenton  County  Court  v.  Bank 
Lick  Turnpike  Co.,  10  Bush,  529. 

We  have  already  declared  that  the  opinion  of  the  tribunal  created, 
not  by  our  constitution  and  laws,  but  by  a  military  governor  of 
a  subjugated  state,  is  not  authoritative  upon  us,  and  the  doctrine 
of  stare  decisis  does  not  apply ;  but,  as  appellee  relied  upon  it,  and 
naturally  and  properly,  as  being  res  adjudicata  in  cutting  the  tim- 
ber, as  alleged  by  appellant  in  his  complaint,  the  trespass  cannot 
be  regarded  as  willful  or  malicious,  and  appellant  was  only  entitled 
to  actual  damages.  Having  dismissed  his  demand  for  actual  dam- 
ages, and  not  being  entitled  to  the  statutory  penalty  for  a  willful 
trespass,  we  feel  constrained  to  affirm  the  judgment  of  the  court 
below. 

We  have  not  thought  it  necessary  to  examine  and  pass  upon  the 
action  of  the  court  below  upon  the  pleadings  generally ;  but  it  may 
be  proper  to  say  that  the  demurrers  to  the  plaintiff's  replication 
and  his  amended  replication  to  defendant's  second  plea  were  prop- 
erly sustained.     Affirmed. 


476  WITHDRAWAL   FROM    PUBLIC    SERVICE.  [CHAP.    VII. 


STATE    ex   rel.    SNYDER   v.   PORTLAND    NATURAL   GAS 

AND  OIL  CO. 

153  Ind.  483.     1899.^ 

Jordan,  C.  J.  This  is  a  proceeding  in  quo  warranto  by  the  state 
of  Indiana,  on  the  relation  of  the  prosecuting  attorney  of  the  twenty- 
sixth  judicial  circuit,  to  dissolve,  and  seize  the  corporate  franchises 
of,  appellee.  The  venue  of  the  cause  was  changed  from  the  Jay 
circuit  court  to  the  Randolph  circuit  court,  in  which  court  a  de- 
murrer was  sustained  to  the  information  for  insufficiency  of  facts, 
and  judgment  was  rendered  in  favor  of  appellee  thereon.  The  state 
appeals,  and  assigns  error  on  the  ruling  of  the  court  in  sustaining 
the  demurrer  to  the  information. 

The  information  is  not  a  model  pleading,  and  may  perhaps  be 
said  to  be  open  to  the  objection  that  in  some  respects  it  is  uncer- 
tain, and  in  others  states  conclusions  instead  of  facts.  The  ques- 
tion, however,  presented  for  our  decision,  is,  are  the  facts  as  therein 
alleged  sufficient  to  entitle  the  state  to  demand  that  the  appellee's 
corporate  franchises  shall  be  declared  forfeited? 

Reduced  to  a  simple  proposition,  the  gravamen  upon  which  it 
bases  its  demanxTtor-a  forfeiture  of  the  defendant's  corporate  rights 
is  that  it  has,  by  an  agreement,  illegally  united  with  the  Citizens' 
Gas,  etc..  Company,  a  competing  company,  under  which  agreement 
the  price  of  gas  to  be  charged  consumers  has  been  fixed,  and  has 
agreed  with  said  company  that  neither  would  furnish  gas  to  per- 
sons who  were  patrons  of  the  other  company.  By  this  agreement 
it  appears  that  it  was  controlled,  and  at  all  times  refused  to  fur- 
nish its  product  to  divers  inhabitants  of  the  city  of  Portland,  simply 
because  they  were  consumers  of  gas  from  the  lines  of  the  Citizens' 
Gas  Company. 

The  insistence  of  counsel  for  the  state  is  that  the  defendant, 
under  the  facts  charged  in  the  information,  is  shown  to  have  com- 
bined with  the  Citizens'  Gas  Company  to  fix  and  maintain  the  price 
of  gas,  and  that  these  companies  agreed  with  each  other  not  to  fur- 
nish gas  to  consumers  who  were  patrons  of  the  other  company,  in 
order  to  prevent  legitimate  competition;  that,  in  carrying  out  the 
compact  or  agreement,  the  defendant  exercised  powers  not  conferred 
by  law,  and  committed  an  act  violative  of  law,  and  is  shown  to 
have  abused  the  rights  conferred  upon  it  by  the  state,  and  hence  it 
ought  to  be  ousted  from  longer  or  further  exercising  its  corporate 
rights. 

1  Part  of  the  opinion  is  omitted. —  Ed. 


WITHDRAWAL   FROM    PUBLIC    SERVICE.  477 

The  Code  provides  that  an  information  may  be  filed  against  a  cor- 
poration when  it  does  or  omits  acts  which  amount  to  a  surrender  or 
forfeiture  of  its  rights  and  privileges  as  a  corporation,  or  when  it 
exercises  powers  not  conferred  by  law.  Burns'  Rev.  St.  189-i  § 
1145  (Eev.  St.  1881,  §  1131 ;  Horner's  Eev.  St.  1897,  §  1131,  subd. 
4).  The  statute  enacts  that  the  information  "shall  consist  of  a 
plain  statement  of  the  facts  which,  constitute  the  grounds  of  the 
proceeding  addressed  to  the  court."  Burns'  Eev.  St.  1894,  §  1147 
(Eev.  St.  1881,  §  1133;  Horner's  Eev.  St.  1897,  §  1133). 

The  authorities  assert,  as  a  general  rule,  that  courts  will  proceed 
with  extreme  caution  in  the  forfeiture  of  corporate  franchises,  and 
a  corporation  will  not  be  deprived  thereof  unless  under  express 
limitation,  or  for  a  plain  abuse  of  its  powers,  whereby  it  fails  to  ful- 
fill the  design  and  purpose  of  its  organization.  When  the  state 
seeks  to  destroy  the  life  of  an  incorporated  body,  it  is  required  to 
show  some  grave  misconduct, —  some  act,  at  least,  by  which  it  has 
offended  the  law  of  its  creation,  or  something  material  which  tends 
to  produce  injury  to  the  public,  and  not  merely  that  which  affects 
only  private  interests,  for  which  other  adequate  remedies  are  pro- 
vided. High,  Extr.  Eem.  §§  649,  654;  People  v.  North  Eiver 
Sugar-Eefining  Co.,  131  N.  Y.  582,  24  N.  E.  832 ;  Bank  of  Vin- 
cennes  v.  State,  I  Blackf.  267.  Where,  however,  the  facts  disclose 
that  a  corporation  has  failed  in  the  discharge  of  its  corporate  duties 
by  uniting  with  others  in  carrying  out  an  agreement,  the  perform- 
ance of  which  is  detrimental  or  injurious  to  the  public,  ^t  thereby 
may  be  said  to  offend  against  the  law  of  its  creation,  and  conse- 
quently forfeits  its  right  to  longer  exercise  its  franchises,  and  is  sub- 
ject to  a  judgment  of  ouster.^  People  v.  North  Eiver  Sugar-Ee- 
fining Co.,  54  Hun,  354,  7  N.  Y.  Supp.  406,  and  121  N.  Y.  582, 
24  N.  E.  832 ;  State  v.  Oberlin  Bldg.  &  Loan  Ass'n.  35  Ohio  St. 
258 ;  State  v.  Cincinnati,  N.  0.  &  T.  P.  Ey.  Co.,  47  Ohio  St.  130, 
23  N.  E.  928 ;  State  v.  Standard  Oil  Co.,  49  Ohio  St.  137,  30  N.  E. 
279 ;  High  Extr.  Eem.  §  666. 

Courts  have  enlarged  the  rule  so  that  an  information  in  the 
nature  of  a  quo  warranto  is  now  regarded  not  only  as  appropriate 
means  of  testing  the  right  to  exercise  corporate  franchises,  but  such 
proceedings  are  also  a  proper  remedy  for  the  abuse  by  a  corpora- 
tion of  the  powers  with  which  it  has  been  invested.  Beach,  Priv. 
Corp.  §  53.  Of  course,  as  asserted  by  the  authorities  previously 
cited,  proceedings  in  quo  warranto  will  not  be  countenanced  or  re- 
ceive the  sanction  of  a  court,  as  a  general  rule,  where  the  act  com- 
plained of  is  of  a  trivial  character,  or  where  the  abuse  charged  may 
be  said  to  be  a  doubtful  one,  or  there  exists  any  other  adequate  or 
ample  remedy  therefor.     Id.  §  436.     Corporations  are  recognized 


478  WITHDRAWAL    FROM    PUBLIC    SERVICE.  [CHAP.    VII. 

as  creatures  of  the  law,  and  they  certainly  owe  obedience  thereto ; 
and  when  they  fail  to  perform  duties  which  they  were  created 
to  discharge,  and  in  which  the  public  have  an  interest,  or  where  they 
do  unauthorized  or  forbidden  acts,  the  state  unquestionably  has  the 
right,  and  it  is  its  duty,  to  object,  and  it  may  interpose  by  infor- 
mation, and  wrest  from  the  offending  corporation  its  franchises. 
Id.  §  840,  841;  Cook,  Stock,  Stockh.  &  Corp.  Law,  §  G35;  People 
V.  Dashaway  Ass'n,  84  Cal.  114,  24  Pac.  277. 

Appellee  is  in  its  nature  a  public  corporation,  which  fact  has  been 
recognized  by  our  legislature  in  conferring  upon  companies  en- 
gaged in  a  business  of  like  character  the  right  of  eminent  domain. 
Acts  1889,  p.  22  (Burns'  Rev.  St.  1894,  §  5103).  Being  the 
creature  of  the  law,  the  franchises  granted  to  it  by  .the  state  —  in 
theory,  at  least  —  were  granted  as  a  public  benefit;  and  in  ac- 
cepting its  rights,  under  the  laws  of  the  state,  it  impliedly  agreed 
to  carry  out  the  purpose  or  object  of  its  creation,  and  assumed  ob- 
ligations to  the  public,  and  such  obligations  it  is  required  to  dis- 
charge.    Beach,  Trusts,  §  221 ;  Thomas  v.  Eailroad  Co.,  101  U.  S. 

71. 

It  certainly  can  be  said,  and  the  proposition  is  sustained  by 
ample  authority,  that,  in  furtherance  of  the  purposes  for  which  it 
was  created,  it  owed  a  duty  to  the  public.  Its  duty  towards  the 
citizens  of  the  city  of  Portland,  and  their  duty  towards  it,  may  be 
said  to  be  somewhat  reciprocal ;  and  any  dealings,  rules,  or  regula- 
tions between  it  and  them  which  do  not  secure  the  just  rights  of 
both  parties  cannot  receive  the  approbation  of  a  court.  The  law, 
among  other  things,  exacted  of  appellee  the  duty  to  offer  and  supply 
gas  impartially,  so  far  as  it  had  the  ability  or  capacity  to  do  so,  to 
all  persons  desiring  its  use  within  the  territory  to  which  its  busi- 
ness was  confined,  provided  always  such  persons  made  the  necessary 
arrangements  to  receive  it,  and  complied  with  the  company's 
reasonable  regulations  and  conditions.  Portland  Natural  Gas  & 
Oil  Co.  V.  State,  135  Ind.  54,  34  N.  E.  818,  and  authorities  there 
cited;  People  v.  Chicago  Gas-Trust  Co.,  130  111.  268,  22  N.  E.  798; 
Chicago  Gaslight  &  Coke  Co.  v.  People's  Gaslight  &  Coke  Co.,  121 
111.  530,  13  N.  E.  169;  Milling  Co.  v.  Mendenhall,  142  Ind.  538, 
41  N.  E.  1033;  Telephone  Co.  v.  Bradbury,  106  Ind.  1,  5  N.  E. 
721;  Same  v.  Falley,  118  Ind.  194,  19  N.  E.  604;  Same  v.  Swove- 
land,  14  Ind.  App.  341,  42  N.  E.  1035 ;  8  Am.  &  Eng.  Enc.  Law, 

614. 

In  the  appeal  of  Thomas  v.  Railroad  Co.,  supra,  Miller,  J., 
speaking  as  the  organ  of  the  court,  said :  "  Where  a  corporation, 
like  a  railroad  company,  has  granted  to  it  by  charter  a  franchise 
intended  in  large  measure  to  be  exercised  for  the  public  good,  the 


WITHDRAWAL   FROM    PUBLIC    SERVICE.  479 

due  performance  of  those  functions  being  the  consideration  of  the 
public  grant,  any  contract  which  disables  the  corporation  from  per- 
forming those  functions  —  which  undertakes,  without  the  consent 
of  the  state,  to  transfer  to  others  the  rights  and  powers  conferred 
by  the  charter,  and  to  relieve  the  grantees  of  the  burden  which 
it  imposes  —  is  a  violation  of  the  contract  with  the  state,  and  is 
void,  as  against  public  policy." 

While  appellee,  by  the  agreement  in  controversy,  cannot  be  said 
to  have  fully  renounced  autonomy,  still  it  did  so  to  the  extent  at 
least,  that  it  thereby  disabled  itself  from  supplying  persons  with 
gas  who  were  patrons  of  the  other  company.  That,  by  entering 
into  this  agreement  and  carrying  it  into  execution,  appellee  vio- 
lated the  law  and  clearly  abused  the  rights  and  powers  conferred 
upon  it  by  the  state,  and  may  be  said  to  have  offended  against  the 
law  of  its  creation,  there  can  be  no  question.  Such  an  illegal 
act  or  agreement  upon  the  part  of  a  corporation  like  appellee  can- 
not be  permitted  to  override  the  law,  and  it  was  the  manifest  duty 
of  the  state  to  interpose,  as  it  has  done,  and  call  it  to  account; 
and,  if  the  charge  made  is  established,  a  deserving  penalty  ought 
to  be  intlicted.  ' 

In  addition  to  the  prayer  for  the  forfeiture  of  appellee's  rights 
as  a  corporation,  the  information  asks  that  such  other  relief  be 
granted  as  is  just  and  proper.  The  rule  is  well  settled  that  a  court, 
in  cases  in  quo  warranto  proceedings,  like  this,  if  the  facts  justify, 
may,  in  the  exercise  of  its  discretion,  render  a  judgment  against 
defendant,  declaring  a  forfeiture  of  its  corporate  franchises,  or  the 
judgment  may  be  a  forfeiture  or  ouster  only  of  the  right  of  the  de- 
fendant to  carry  out  or  continue  the  illegal  act  or  acts  charged  and 
established.)  State  v.  Standard  Oil  Co.,  49  Ohio  St.  137,  30  N.  E. 
279;  Cook,  Stock,  Stockh.  &  Corp.  Law,  §  635. 

From  what  we  have  said,  it  follows  that  the  court  erred  in  sus- 
taining appellee's  demurrer  to  the  information;  and  the  judgment 
is  therefore  reversed,  and  the  cause  remanded,  with  instructions 
to  the  trial  court  for  further  proceedings  consistent  with  this 
opinion.- 

2  See  State  v.  Real  Est.  Bank  (1844),  5  Ark.  595;  Darnell  v.  State 
(188G),  48  Ark.  321. 


Appendix. 

THE  ACT  TO  REGULATE  COMMEECE 
AS  AMENDED/ 

Be  it  enacted  hy  the  Senate  and  House  of  Represen- 
tatives of  the  United  States  of  America  in  Congress 
assembled. 

Sec.   1.   (.45  amended  June  29,   1906,  April  13,   ,  Ca>-"ers    and 

^  '  '        L  ^tra  nsportation 

1908,  and  June  18,  1910.)  That  the  provisions  of  subject  to  the 
this  Act  shall  apply  to  any  corporation  or  any  person 
or  persons  engaged  in  the  transportation  of  oil  or 
other  commodity,  except  water  and  except  natural  or 
artificial  gas,  by  means  of  pipe  lines,  or  partly  by  pipe 
lines  and  partly  by  railroad,  or  partly  by  pipe  lines 
and  partly  by  water,  and  to  telegraph,  telephone,  and  gp'Jone^'^tnd'  ^ca- 
cable  companies  (whether  wire  or  wireless)  engaged  bie  companies, 
in  sending  messages  from  one  State,  Territory,  or  Dis- 
trict of  the  United  States,  to  any  other  State,  Terri- 
tory, or  District  of  the  United  States,  or  to  any  for- 
eign country,  who  shall  be  considered  and  held  to  be 
common  carriers  within  the  meaning  and  purpose  of 
this  Act,  and  to  any  common  carrier  or  carriers  en- 
gaged in  the  transportation  of  passengers  or  property  ^g^er'Yines  ^^^ 
wholly  by  railroad  (or  partly  by  railroad  and  partly 
by  water  when  both  are  used  under  a  common  control, 
management,  or  arrangement  for  a  continuous  car- 
riage or  shipment),  from  one  State  or  Territory  of  the 
United  States  or  the  District  of  Columbia,  to  any 
other  State  or  Territory  of  the  United  States  or  the 
District  of  Columbia,  or  from  one  place  in  a  Terri- 

1  An  act  to  regulate  commerce,  approved  February  4,  1887,  and  in  effect 
April  5,  1887  (24  Statutes  at  Large,  379).  as  amended  by  an  act  approved 
March  2,  1889  (25  Statutes  at  Large,  8.5.5),  bv  an  act  approved  February 
10.  1891  (2G  Statutes  at  Large,  743),  by  an  act  approved  February  8,  1895 
(28  Statutes  at  Large.  (U3 ) ,  by  an  act  approved  .Tune  29.  1906  (34  Stat- 
utes at  Large,  584),  bv  a  joint  resolution  approved  June  30,  1906  (34  Stat- 
utes at  Large,  a38).  by  an  act  approved  April  13,  1908  (35  Statutes  at 
Large,  60),  by  an  act  approved  February  25,  1909  (.35  Statutes  at  Large, 
648),  by  an  act  approved  June  18.  1910  (.36  Statutes  at  Large,  539),  by 
an  act  approved  August  24.  1912  (37  Statutes  at  Large,  566),  by  an  act 
approved  March  1,  1913  (37  Statutes  at  Large,  701),  and  by  an  act  ap- 
proved March  4,  1915   (38  Statutes  at  Large,  1196). 


483  APPENDIX, 

tory  to  another  place  in  the  same  Territory,  or  from 
any  place  in  the  United  States  to  an  adjacent  foreign 
country,  or  from  any  place  in  the  United  States 
through  a  foreign  country  to  any  other  place  in  the 
United  States,  and  also  to  the  transportation  in  like 
manner  of  property  shipped  from  any  place  in  the 
United  States  to  a  foreign  country  and  carried  from 
such  place  to  a  port  of  transshipment,  or  shipped 
from  a  foreign  country  to  any  place  in  the  United 
States  and  carried  to  such  place  from  a  port  of  entry 
either  in  the  United  States  or  an  adjacent  foreign 
country:  Provided,  however.  That  the  provisions  of 
Act  does  not  ^his  Act  shall  not  apply  to  the  transportation  of  pas- 

apply    to    trans-  ri    j  x  i 

p  o  r  t  a  t  i  o  n  seugers  Or  property,  or  to  the  receiving,  delivering, 

wholly       within  *=  1         IT  J?  4-  u    n  •+!  • 

one  State.  storagc,  or  handling  ot  property  wholly  withm  one 

State  and  not  shipped  to  or  from  a  foreign  country 
from  or  to  any  State  or  Territory  as  aforesaid,  nor 
shall  they  apply  to  the  transmission  of  messages  by 
telephone,  telegraph,  or  cable  wholly  within  one  State 
and  not  transmitted  to  or  from  a  foreign  country  from 
or  to  any  State  or  Territory  as  aforesaid. 
What      the       The  term  "common  carrier"  as  used  in  this  Act 

term  rail- 

road"  includes,  shall  iucludc  cxprcss  companies  and  sleeping  car  com- 

Express    com-  '-  _^  t     .        ji  • 

panies  and  pauics.  The  term  railroad  as  used  m  this  Act 
companies  in-  shall  include  all  bridges  and  ferries  used  or  operated 
in  connection  with  any  railroad,  and  also  all  the  road 
in  use  by  any  corporation  operating  a  railroad, 
whether  owned  or  operated  under  a  contract,  agree- 
ment, or  lease,  and  shall  also  include  all  switches, 
spurs,  tracks,  and  terminal  facilities  of  every  kind 
used  or  necessary  in  the  transportation  of  the  persons 
or  property  designated  herein,  and  also  all  freight 
depots,  yards,  and  grounds  used  or  necessary  in  the 
transportation  or  delivery  of  any  of  said  property; 
What  ,    th  e  ^nd  the  term  "  transportation  "  shall  include  cars  and 

term         trans-  ^ 

portation"  in-  other  Vehicles  and  all  instrumentalities  and  facilities 
of  shipment  or  carriage,  irrespective  of  ownership  or 
of  any  contract,  express  or  implied,  for  the  use  thereof 
and  all  services  in  connection  with  the  receipt,  de- 
livery, elevation,  and  transfer  in  transit,  ventilation, 
refrigeration  or  icing,  storage,  and  handling  of  prop- 
erty transported;  and  it  shall  be  the  duty  of  every 
carrier  subject  to  the  provisions  of  this  Act  to  provide 
and  furnish  such  transportation  upon  reasonable  re- 


cludes. 


APPENDIX. 


483 


quest  therefor,  and  to  establish  through  routes  and 
just  and  reasonable  rates  applicable  thereto;  and  to 
provide  reasonable  facilities  for  operating  such 
through  routes  and  to  make  reasonable  rules  and  regu- 
lations with  respect  to  the  exchange,  interchange,  and 
return  of  cars  used  therein,  and  for  the  operation  of 
such  through  routes,  and  providing  for  reasonable 
compensation  to  those  entitled  thereto. 

All  charges  made  for  any  service  rendered  or  to  be   ,   Charges  must 

*=  -^  be  just  and  rea- 

rendered  in  the  transportation  of  passengers  or  prop-  sonabie. 
erty  and  for  the  transmission  of  messages  by  tele- 
graph, telephone,  or  cable,  as  aforesaid,  or  in  connec- 
tion therewith,  shall  be  just  and  reasonable ;  and  every 
unjust  and  unreasonable  charge  for  such  service  or 
any  part  thereof  is  prohibited  and  declared  to  be 
unlawful :  Provided,  That  messages  by  telegraph, 
telephone,  or  cable,  subject  to  the  provisions  of  this 
Act,  may  be  classified  into  day,  night,  repeated,  un- 
repeated,  letter,  commercial,  press,  Government,  and 
such  other  classes  as  are  just  and  reasonable,  and 
different  rates  may  be  charged  for  the  different  classes 
of  messages:  And  provided  further,  That  nothing  in 
this  Act  shall  be  construed  to  prevent  telephone,  tele- 
graph, and  cable  companies  from  entering  into  con- 
tracts with  common  carriers,  for  the  exchange  of 
services. 

And  it  is  hereby  made  the  duty  of  all  common  car-  ^j^^^^^ &ssi fica- 
riers  subject  to  the  provisions  of  this  Act  to  establish,  'jons'  and  prac- 
observe,  and  enforce  just  and  reasonable  classifications  just  and  rea- 
of  property  for  transportation,  with  reference  to  which 
rates,  tariffs,  regulations,  or  practices  are  or  may  be 
made  or  prescribed,  and  just  and  reasonable  regula- 
tions and  practices  affecting  classifications,  rates,  or 
tariffs,  the  issuance,  form,  and  substance  of  tickets,  re- 
ceipts, and  bills  of  lading,  the  manner  and  method  of 
presenting,  marking,  packing,  and  delivering  property 
for  transportation,  the  facilities  for  transportation, 
the  carrying  of  personal,  sample,  and  excess  baggage, 
and  all  other  matters  relating  to  or  connected  with  the 
receiving,  handling,  transporting,  storing,  and  deliv- 
ery of  property  subject  to  the  provisions  of  this  Act 
which  may  be  necessary  or  proper  to  secure  the  safe 
and  prompt  receipt,  handling,  transportation,  and  de- 
livery of  property  subject  to  the  provisions  of  this 


sonabie. 


484  APPENDIX. 

Act  upon  just  and  reasonable  terms,  and  every  such 
unjust  and  unreasonable  classification,  regulation,  and 
practice  with  reference  to  commerce  between  the 
States  and  with  foreign  countries  is  prohibited  and 
declared  to  be  unlawful. 
Free     passes       '^q  common  Carrier  subject  to  the  provisions  of  this 

portatfon    ""p^o-  Act  shall,  after  January  first,  nineteen  hundred  and 

hibited.  seven,  directly  or  indirectly,  issue  or  give  any  inter- 

state free  ticket,  free  pass,  or  free  transportation  for 
passengers,  except  to  its  employees  and  their  families, 
its  officers,  agents,  surgeons,  physicians,  and  attorneys 
Excepted  ^t  law ;  to  ministers  of  religion,  traveling  secretaries 

c  asses.  ^^  railroad  Young  Men's  Christian  Associations,  in- 

mates of  hospitals  and  charitable  and  eleemosynary  in- 
stitutions, and  persons  exclusively  engaged  in  charit- 
able and  eleemosynary  work;  to  indigent,  destitute, 
and  homeless  persons,  and  to  such  persons  when  trans- 
ported by  charitable  societies  or  hospitals,  and  the  nec- 
essary agents  employed  in  such  transportation ;  to  in- 
mates of  the  National  Homes  or  State  Homes  for  Dis- 
abled Volunteer  Soldiers,  and  of  Soldiers'  and  Sailors' 
Homes,  including  those  about  to  enter  and  those  re- 
turning home  after  discharge ;  to  necessary  care  takers 
of  live  stock,  poultry,  milk,  and  fruit;  to  employees 
on  sleeping  cars,  express  cars,  and  to  linemen  of  tele- 
graph and  telephone  companies;  to  Railway  Mail 
Service  employees,  post-office  inspectors,  customs  in- 
spectors, and  immigration  inspectors ;  to  newsboys  on 
trains,  baggage  agents,  witnesses  attending  any  legal 
investigation  in  which  the  common  carrier  is  inter- 
ested, persons  injured  in  wrecks  and  physicians  and 
Interchange  nurses  attending  such  persons:  Provided,  That  this 

thorized.  provision  shall  not  be  construed  to  prohibit  the  inter- 

change of  passes  for  the  officers,  agents,  and  employees 
of  common  carriers,  and  their  families ;  nor  to  prohibit 
any  common  carrier  from  carrying  passengers  free 
with  the  object  of  providing  relief  in  cases  of  general 
epidemic,  pestilence,  or  other  calamitous  visitation : 
And  p'ovided  further,  That  this  provision  shall  not  be 
construed  to  prohibit  the  privilege  of  passes  or  franks, 
or  the  exchange  thereof  with  each  other,  for  the  offi- 
cers, agents,  employees,  and  their  families  of  such  tele- 
graph, telephone,  and  cable  lines,  and  the  officers, 
agents,  employees  and  their  families  of  other  com- 


APPENDIX. 


485 


mon  carriers  subject  to  the  provisions  of  tliis  Act : 
Provided  further.  That  the  term  "  employees  "  as  used 
in  this  paragraph  shall  include  furloughed,  pensioned, 
and  superannuated  employees,  persons  who  have  be- 
come disabled  or  infirm  in  the  service  of  any  such 
common  carrier,  and  the  remains  of  a  person  killed  in 
the  employment  of  a  carrier  and  ex-employees  travel- 
ing for  the  purpose  of  entering  the  service  of  any  such 
common  carrier ;  and  the  term  "  families  "  as  used  in 
this  paragraph  shall  include  the  families  of  those  per- 
sons named  in  this  proviso,  also  the  families  of  per- 
sons killed,  and  the  widows  during  widowhood  and 
minor  children  during  minority  of  persons  who  died, 
while  in  the  service  of  any  such  common  carrier. 
Any  common  carrier  violating  this  provision  shall  be 
deemed  guilty  of  a  misdemeanor,  and  for  each  offense, 
on  conviction,  shall  pay  to  the  United  States  a  penalty 
of  not  less  than  one  hundred  dollars  nor  more  than 
two  thousand  dollars,  and  any  person,  other  than  the 
persons  excepted  in  this  provision,  who  uses  any  such 
interstate  free  ticket,  free  pass,  or  free  transportation 
shall  be  subject  to  a  like  penalty.  Jurisdiction  of  of- 
fenses under  this  provision  shall  be  the  same  as  that 
provided  for  offenses  in  an  Act  entitled  "  An  Act  to 
further  regulate  commerce  with  foreign  nations  and 
among  the  States,"  approved  February  nineteenth, 
nineteen  hundred  and  three,  and  any  amendment 
thereof.     (See  section  22.) 

From  and  after  May  first,  nineteen  hundred  and 
eight,  it  shall  be  unlawful  for  any  railroad  company  to 
transport  from  any  State,  Territory,  or  the  District 
of  Columbia,  to  any  other  State,  Territory,  or  the  Dis- 
trict of  Columbia,  or  to  any  foreign  country,  any 
article  or  commodity,  other  than  timber  and  the 
manufactured  products  thereof,  manufactured,  mined, 
or  produced  by  it,  or  under  its  authority,  or  which  it 
may  own  in  whole  or  in  part,  or  in  which  it  may  have 
any  interest,  direct  or  indirect,  except  such  articles  or 
commodities  as  may  be  necessary  and  intended  for  its 
use  in  the  conduct  of  its  business  as  a  common  car- 
rier. 

Any  common  carrier  subject  to  the  provisions  of 
this  Act,  upon  application  of  any  lateral,  branch  line 
of  railroad,  or  of  any  shipper  tendering  interstate 


What  terms 
' '  employees  ' ' 
and  "families" 
include. 


Jurisdiction 
and  penalty  for 
violation. 


Commodities 
clause. 


486 


APPENDIX. 


Carriers'/ 
duty  to  con-] 
struct  switch 
connections.        i 


Switch  con- 
nections may 
be  ordered  by 
the  C  o  m  m  i  s  - 
sion. 


Unjust  dis- 
crimination de- 
fined and  for- 
bidden. 


traffic  for  transportation,  shall  construct,  maintain, 
and  operate  upon  reasonable  terms  a  switch  connection 
with  any  such  lateral,  branch  line  of  railroad,  or  pri- 
vate side  track  which  may  be  constructed  to  connect 
with  its  railroad,  where  such  connection  is  reasonably 
practicable  and  can  be  put  in  with  safety  and  will  fur- 
nish sufficient  business  to  justify  the  construction  and 
maintenance  of  the  same;  and  shall  furnish  cars  for 
the  movement  of  such  traffic  to  the  best  of  its  abilit}" 
without  discrimination  in  favor  of  or  against  any  such 
shipper.  If  any  common  carrier  shall  fail  to  install 
and  operate  any  such  switch  or  connection  as  afore- 
said, on  application  therefor  in  writing  by  any  shipper 
or  owner  of  such  lateral,  branch  line  of  railroad,  such 
shipper  or  owner  of  such  lateral,  branch  line  of  rail- 
road may  make  complaint  to  the  Commission,  as  pro- 
vided in  section  thirteen  of  this  Act,  and  the  Com- 
mission shall  hear  and  investigate  the  same  and  shall 
determine  as  to  the  safety  and  practicability  thereof 
and  justification  and  reasonable  compensation  there- 
for, and  the  Commission  may  make  an  order,  as  pro- 
vided in  section  fifteen  of  this  Act,  directing  the  com- 
mon carrier  to  comply  with  the  provisions  of  this  sec- 
tion in  accordance  with  such  order,  and  such  order 
shall  be  enforced  as  hereinafter  provided  for  the  en- 
forcement of  all  other  orders  by  the  Commission, 
other  than  orders  for  the  payment  of  money. 

Sec.  2.  That  if  any  common  carrier  subject  to  the 
provisions  of  this  Act  shall,  directly  or  indirectly,  by 
any  special  rate,  rebate,  drawback,  or  other  device, 
charge,  demand,  collect,  or  receive  from  any  person 
or  persons  a  greater  or  less  compensation  for  any  serv- 
ice rendered,  or  to  be  rendered,  in  the  transportation 
of  passengers  or  property,  subject  to  the  provisions  of 
this  act,  than  it  charges,  demands,  collects,  or  receives 
from  any  other  person  or  persons  for  doing  for  him  or 
them  alike  and  contemporaneous  service  in  the  trans- 
portation of  a  like  kind  of  traffic  under  substantially 
similar  circumstances  and  conditions,  such  common 
carrier  shall  be  deemed  guilty  of  unjust  discrimina- 
tion, which  is  hereby  prohibited  and  declared  to  be  un- 
lawful. 

Sec.  3.  That  it  shall  be  unlawful  for  any  common 
carrier  subject  to  the  provisions  of  this  act  to  make  or 


APPENDIX. 


487 


give  any  undue  or  unreasonable  preference  or  advan- 
tage to  any  particular  person,  company,  firm,  corpora- 
tion, or  locality,  or  any  particular  description  of 
traffic,  in  any  respect  whatsoever,  or  to  subject  any 
particular  person,  company,  firm,  corporation,  or  lo- 
cality, or  any  particular  description  of  traffic,  to  any 
undue  or  unreasonable  prejudice  or  disadvantage  in 
any  respect  whatsoever. 

Every  common  carrier  subject  to  the  provisions  of 
this  Act  shall,  according  to  their  respective  powers, 
afford  all  reasonable,  proper,  and  equal  facilities  for 
the  interchange  of  traffic  between  their  respective 
lines,  and  for  the  receiving,  forwarding,  and  deliver- 
ing of  passengers  and  property  to  and  from  their  sev- 
eral lines  and  those  connecting  therewith,  and  shall 
not  discriminate  in  their  rates  and  charges  between 
such  connecting  lines ;  but  this  shall  not  be  construed 
as  requiring  any  such  common  carrier  to  give  the  use 
of  its  tracks  or  terminal  facilities  to  another  carrier 
engaged  in  like  business. 

Sec.  4.     {As  amended  June  IS,  1910.)     That  it 
shall  be  unlawful  for  any  common  carrier  subject  to 
the  provisions  of  this  Act  to  charge  or  receive  any 
greater  compensation  in  the  aggregate  for  the  trans- 
portation of  passengers,  or  of  like  kind  of  property, 
for  a  shorter  than  for  a  longer  distance  over  the  same 
line  or  route  in  the  same  direction,  the  shorter  being 
included  within  the  longer  distance,  or  to  charge  any 
greater  compensation  as  a  through  route  than  the  ag- 
gregate of  the  intermediate  rates  subject  to  the  pro- 
visions of  this  Act ;  but  this  shall  not  be  construed  as 
authorizing  any  common  carrier  within  the  terms  of 
this  Act  to  charge  or  receive  as  great  compensation 
for  a  shorter  as  for  a  longer  distance:  Provided,  how- 
ever. That  upon  application  to  the  Interstate  Com- 
merce   Commission    such    common    carrier    may    in 
special  cases,   after  investigation,  be  authorized  by 
the  Commission  to  charge  less  for  longer  than  for 
shorter  distances  for  the  transportation  of  passengers 
or  property;  and  the  Commission  may  from  time  to 
time  prescribe'  the  extent  to  which  such  designated 
common  carrier  may  be  relieved  from  the  operation 
of  this  section:  Provided  further,  That  no  rates  or 
charges  lawfully  existing  at  the  time  of  the  passage 


Undue  or  un- 
reasonable pref- 
erence or  ad- 
vantage forbid- 
den. 


Facilities  for 
interchange  of 
traffic. 


Discrimina- 
tion between 
connecting 
lines    forbidden. 


Long  and 
short  haul  pro- 
vision. 


Commission 
has  authority 
to  relieve  car- 
riers from  the 
operation  o  f 

this   section. 


488  APPENDIX. 

of  this  amendatory  Act  shall  be  required  to  be  changed 
by  reason  of  the  provisions  of  this  section  prior  to  the 
expiration  of  six  months  after  the  passage  of  this  Act, 
nor  in  any  case  where  application  shall  have  been  filed 
before  the  Commission,  in  accordance  with  the  provis- 
ions of  this  section,  until  a  determination  of  such  ap- 
plication by  the  Commission, 
du^ed  *  to^  melt  Whenever  a  carrier  by  railroad  shall  in  competition 
water    competi-  -v^^tli  a  Water  routc  or  routes  reduce  the  rates  on  the 

tion    not    to    be 

raised  without  carriage  of  any  species  of  freight  to  or  from  competi- 
tive points,  it  shall  not  be  permitted  to  increase  such 
rates  unless  after  hearing  by  the  Interstate  Commerce 
Commission  it  shall  be  found  that  such  proposed  in- 
crease rests  upon  changed  conditions  other  than  the 
elimination  of  water  competition. 

Sec.  5.  (As  amended  August  2Jt,  1912.)  That  it 
shall  be  unlawful  for  any  common  carrier  subject  to 
the  provisions  of  this  Act  to  enter  into  any  contract, 
agreement,  or  combination  with  any  other  common 
carried  or  carriers  for  the  pooling  of  freights  of  differ- 
freT  ht°sUmi^d"i^  ^^^  ^^^  Competing  railroads,  or  to  divide  between 
vision  of  earn-  them  the  aggregate  or  net  proceeds  of  the  earnings  of 

mgs    forbidden.  ^'^     °  •  i  n  t 

such  railroads,  or  any  portion  thereof ;  and  m  any 
case  of  an  agreement  for  the  pooling  of  freights  as 
aforesaid,  each  day  of  its  continuance  shall  be  deemed 
a  separate  offense. 
k^'^st2fTQi2        From  and  after  the  first  day  of  July,  nineteen  hun- 
dred and  fourteen,  it  shall  be  unlawful  for  any  rail- 
road company  or  other  common  carrier  subject  to  the 
Act  to  regulate  commerce  to  own,  lease,  operate,  con- 
trol, or  have  any  interest  whatsoever  (by  stock  own- 
ership    or     otherwise,     either     directly,     indirectly, 
to^^owrf*^^com-  ^^rough  any  holding  company,  or  by  stockholders  or 
peting       water  directors  in  common,  or  in  any  other  manner)  in  any 

carriers.  .  ^  -^  '  '' 

common  earner  by  water  operated  through  the 
Panama  Canal  or  elsewhere  with  which  said  railroad 
or  other  carrier  aforesaid  does  or  may  compete  for 
traffic  or  any  vessel  carrying  freight  or  passengers 
upon  said  water  route  or  elsewhere  with  which  said 
railroad  or  other  carrier  aforesaid  does  or  may  com- 
Penaity.  pg^e  for  traffic;  and  in  case  of  the  violation  of  this 

pro\dsion  each  day  in  which  such  violation  continues 
shall  be  deemed  a  separate  offense. 

Jurisdiction  is  hereby  conferred  on  the  Interstate 


APPENDIX. 


489 


Commerce  Commission  to  determine  questions  of  fact 
as  to  the  competition  or  possibility  of  competition, 
after  full  hearing,  on  the  application  of  any  railroad 
company  or  other  carrier.  Such  application  may  be 
filed  for  the  purpose  of  determining  whether  any  ex- 
isting service  is  in  violation  of  this  section  and  pray 
for  an  order  permitting  the  continuance  of  any  vessel 
or  vessels  already  in  operation,  or  for  the  purpose  of 
asking  an  order  to  install  new  service  not  in  conflict 
with  the  provisions  of  this  paragraph.  The  Commis- 
sion may  on  its  own  motion  or  the  application  of  any 
shipper  institute  proceedings  to  inquire  into  the  op- 
eration of  any  vessel  in  use  by  any  railroad  or  other 
carrier  which  has  not  applied  to  the  Commission  and 
had  the  question  of  competition  or  the  possibility  of 
competition  determined  as  herein  provided.  In  all 
such  cases  the  order  of  said  Commission  shall  be  final. 
If  the  Interstate  Commerce  Commission  shall  be 
of  the  opinion  that  any  such  existing  specified  service 
by  water  other  than  through  the  Panama  Canal  is  be- 
ing operated  in  the  interest  of  the  public  and  is  of  ad- 
vantage to  the  convenience  and  commerce  of  the  peo- 
ple, and  that  such  extension  will  neither  exclude,  pre- 
vent, nor  reduce  competition  on  the  route  by  water 
under  consideration,  the  Interstate  Commerce  Com- 
mission may,  by  order,  extend  the  time  during  which 
such  service  by  water  may  continue  to  be  operated  be- 
yond July  first,  nineteen  hundred  and  fourteen.  In 
every  case  of  such  extension  the  rates,  schedules,  and 
practices  of  such  water  carrier  shall  be  filed  with  the 
Interstate  Commerce  Commission  and  shall  be  subject 
to  the  Act  to  regulate  commerce  and  all  amendments 
thereto  in  the  same  manner  and  to  the  same  extent  as 
is  the  railroad  or  other  common  carrier  controlling 
such  water  carrier  or  interested  in  any  manner  in  its 
operation:  Provided,  Any  application  for  extension 
under  the  terms  of  this  provision  filed  with  the  Inter- 
state Commerce  Commission  prior  to  July  first,  nine- 
teen hundred  and  fourteen,  but  for  any  reason  not 
heard  and  disposed  of  before  said  date,  may  be  con- 
sidered and  granted  thereafter. 

No  vessel  permitted  to  engage  in  the  coastwise  or 
foreign  trade  of  the  United  States  shall  be  permitted 
to  enter  or  pass  through  said  canal  if  such  ship  is 


Commission 
t  o  determine 
as  to  competi- 
tion. 


Orders    to    be 
final. 


Commission's 
authority  to  al- 
low ownership 
of  certain  ves- 
sel lines  by 
railroads. 


Rates  of  such 
water  carriers 
to  be  filed 
with  Commis- 
sion. 


Violators  of 
Sherman  Act 
not  to  use 
canal. 


490  APPENDIX. 

owned,  chartered,  operated,  or  controlled  by  any  per- 
son or  company  which  is  doing  business  in  violation  of 
the  provisions  of  the  Act  of  Congress  approved  July 
second,  eighteen  hundred  and  ninety,  entitled  "  An 
Act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies,"  or  the  provisions  of  sec- 
tions seventy-three  to  seventy-seven,  both  inclusive,  of 
an  Act  approved  August  twenty-seventh,  eighteen 
hundred  and  ninety-four,  entitled  "  An  Act  to  reduce 
taxation,  to  provide  revenue  for  the  Government,  and 
for  other  purposes,"  or  the  provisions  of  any  other  Act 
of  Congress  amending  or  supplementing  the  said  Act 
of  July  second,  eighteen  hundred  and  ninety,  com- 
monly known  as  the  Sherman  Antitrust  Act,  and 
amendments  thereto,  or  said  sections  of  the  Act  of 
August  twenty-seventh,  eighteen  hundred  and  ninety- 
four.  The  question  of  fact  may  be  determined  by  the 
judgment  of  any  court  of  the  United  States  of  compe- 
tent jurisdiction  in  any  cause  pending  before  it  to 
which  the  owners  or  operators  of  such  ship  are  parties. 
Suit  may  be  brought  by  any  shipper  or  by  the  Attor- 
ney General  of  the  United  States. 

Sec.  6.  {Amended  March  2,  1889.  Following  sec- 
tion substituted  June  29,  1906.  Amended  June  18, 
1910,  and  August  24,  1912.)  That  every  common 
carrier  subject  to  the  provisions  of  this  Act  shall  file 
with  the  Commission  created  by  this  Act  and  print 
and  keep  open  to  public  inspection  schedules  showing 
all  the  rates,  fares,  and  charges  of  transportation  be- 
tween different  points  on  its  own  route  and  between 
points  on  its  own  route  and  points  on  the  route  of  any 
other  carrier  by  railroad,  by  pipe  line,  or  by  water 
when  a  through  route  and  joint  rate  have  been  estab- 
lished. If  no  joint  rate  over  the  through  route  has 
po^s"u*!f|  ^o\  ^^^^  established,  the  several  carriers  in  such  through 
schedules       of  routc  shall  file,  print  and  keep  open  to  public  inspec- 

rates,  fares,  and       .  r?  i  r      i  r  i 

charges  inciud-  tion  as  aforcsaid,  the  separately  established  rates,  fares 

regulations    af-   and  chargcs  applied  to  the  through  transportation. 

same!f cing,  stor^  The  schcdulcs  printed  as  aforesaid  by  any  such  com- 

n^a'i  '*°'lhlr™s^  '^'^^^  Carrier  shall  plainly  state  the  places  between 

ciassiflcatfons!^*  which  property  and  passengers  will  be  carried,  and 

shall  contain  the  classification  of  freight  in  force, 

and  shall  also  state  separately  all  terminal  charges, 

storage  charges,  icing  charges,  and  all  other  charges 


APPENDIX. 


491 


which  the  Commission  may  require,  all  privileges 
or  facilities  granted  or  allowed  and  any  rules  or 
regulations  which  in  any  wise  change,  affect,  or 
determine  any  part  or  the  aggregate  of  such 
aforesaid  rates,  fares,  and  charges,  or  tlie  value 
of  the  service  rendered  to  the  passenger,  shipper,  or 
consignee.  Such  schedules  shall  be  plainly  printed  in 
large  type,  and  copies  for  the  use  of  the  public  shall 
be  kept  posted  in  two  public  and  conspicuous  places 
in  every  depot,  station,  or  office  of  such  carrier  where 
passengers  or  freight,  respectively,  are  received  for 
transportation,  in  such  form  that  they  shall  be  accessi- 
ble to  the  public  and  can  be  conveniently  inspected. 
The  provisions  of  this  section  shall  apply  to  all  traffic, 
transportation,  and  facilities  defined  in  this  Act. 

Any  common  carrier  subject  to  the  provisions  of 
this  Act  receiving  freight  in  the  United  States  to  be 
carried  tlirough  a  foreign  country  to  any  place  in  the 
United  States  shall  also  in  like  manner  print  and  keep 
open  to  public  inspection,  at  every  depot  or  office 
where  such  freight  is  received  for  shipment,  schedules 
showing  the  through  rates  established  and  charged  by 
such  common  carrier  to  all  points  in  the  United  States 
beyond  the  foreign  country  to  which  it  accepts  freight 
for  shipment;  and  any  freight  shipped  from  the 
United  States  through  a  foreign  country  into  the 
United  States  the  through  rate  on  which  shall  not 
have  been  made  public,  as  required  by  this  Act,  shall, 
before  it  is  admitted  into  the  United  States  from  said 
foreign  country,  be  subject  to  customs  duties  as  if 
said  freight  were  of  foreign  production. 

No  change  shall  be  made  in  the  rates,  fares,  and 
charges  or  joint  rates,  fares,  and  charges  which  have 
been  filed  and  published  by  any  common  carrier  in 
compliance  with  the  requirements  of  this  section,  ex- 
cept after  thirty  days'  notice  to  the  Commission  and 
to  the  public  published  as  aforesaid,  which  shall 
plainly  state  the  changes  proposed  to  be  made  in  the 
schedule  then  in  force  and  the  time  when  the  changed 
rates,  fares,  or  charges  will  go  into  effect;  and  the 
proposed  changes  shall  be  shown  by  printing  new 
schedules,  or  shall  be  plainly  indicated  upon  the  sched- 
ules in  force  at  the  time  and  kept  open  to  public  in- 
spection :  Provided,  That  the  Commission  may,  in  its 


Printing  and 
posting  of 
s  c  h  e  d  u  les  of 
rates  on  freight 
carried  through 
a  foreign  coun- 
try. 


Freight  sub- 
ject to  customs 
duties  in  case  of 
failure  to  pub- 
1  i  s  h  through 
rates. 


Thirty  days' 
public  notice  of 
change  in  rates 
must  be  given. 


492  APPENDIX. 

discretion  and  for  good  cause  shown,  allow  changes 
Commission  ^pon  less  than  the  notice  herein  specified,  or  modify 

may  modify   re-       ^  pi-  •         •  i  i-   n 

quirements     of  the  requirements  oi  this  section  m  respect  to  publish- 

this   section.  .  ..  -i    n^■  j?  i.      -^         -xi  •  j.-       i 

mg,  posting,  and  himg  of  tariiis,  either  m  particular 
instances  or  by  a  general  order  applicable  to  special  or 
peculiar  circumstances  or  conditions. 
Joint    tariffs       fpi^g  naiiies  of  the  several  carriers  which  are  parties 

must      specify  •  i  i 

names    of    car-  to  any  joint  tariff  shall  be  specified  therein,  and  each 

pating.      E  V  i  -  of  the  parties  thereto,  other  than  the  one  filing  the 

curr^e^nce!     '^°^    Same,  shall  file  with  the  Commission  such  evidence  of 

concurrence  therein  or  acceptance  thereof,  as  may  be 

required  or  approved  by  the  Commission,  and  where 

such  evidence  of  concurrence  or  acceptance  is  filed  it 

shall  not  be  necessary  for  the  carriers  filing  the  same 

to  also  file  copies  of  the  tariffs  in  which  they  are 

named  as  parties. 

Copies  of  con-       Everv  common  carrier  subiect  to  this  Act  shall  also 

tracts,         agree-  -^  •> 

ments,    or    ar-  file  with   Said   Commissiou  copies   of  all  contracts, 

rangements     re-  ,  -n        jt 

lating  to  traffic  agreements,  or  arrangements  with  other  common  car- 
wTt  h  commfs-  ricrs  in  relation  to  any  traffic  affected  by  the  provis- 
^'°'^'  ions  of  this  Act  to  which  it  may  be  a  party. 

Commission       ^he  Commissiou  may  determine  and  prescribe  the 

may       prescribe  >'  .  ■■• 

forms  of  sciied-   form  in  which  the  schedules  required  by  this  section 

to  be  kept  open  to  public  inspection  shall  be  prepared 

and  arranged  and  may  change  the  form  from  time  to 

time  as  shall  be  found  expedient. 

No      carrier       ]s^q  carrier,  unless  otherwise  provided  by  this  Act, 

shall    engage    m  •'  J  •  j> 

t  r  a  nsportation  shall  engage  Or  participate  in  the  transportation  oi 

unless     it     files  o    o  i  i  x 

and  publishes  passcugcrs  or  property,  as  defined  in  this  Act,  unless 
charges^^hfre^o"n.  the  rates,  fares,  and  charges  upon  which  the  same  are 
transported  by  said  carrier  have  been  filed  and  pub- 
lished in  accordance  with  the  provisions  of  this  Act; 
nor  shall  any  carrier  charge  or  demand  or  collect  or  re- 
ceive a  greater  or  less  or  different  compensation  for 
such  transportation  of  passengers  or  property,  or  for 
any  service  in  connection  therewith,  between  the 
points  named  in  such  tariffs  than  the  rates,  fares,  and 
Pub  1  i  s  h  e  d  charges  which  are  specified  in  the  tariff'  filed  and  in 

rates      to     be  o  x 

strictly  ob-  effcct  at  the  time ;  nor  shall  any  carrier  refund  or  re- 

S6rV6Q  ^  •/ 

mit  in  any  manner  or  by  any  device  any  portion  of 
the  rates,  fares,  and  charges  so  specified,  nor  extend 
to  any  shipper  or  person  any  privileges  or  facilities  in 
the  transportation  of  passengers  or  property,  except 


"Car  r  i  e  r 
means    '  'com- 


mon carrier."      such  as  are  specified  in  such  tariffs:  Provided,  That 


APPENDIX. 


493 


wherever  the  word  "  carrier "  occurs  in  this  Act  it 
shall  be  held  to  mean  "  common  carrier." 

That  in  time  of  war  or  threatened  war  preference 
and  precedence  shall,  upon  the  demand  of  the  Presi- 
dent of  the  United  States,  be  given,  over  all  other 
traffic,  to  the  transportation  of  troops  and  material  of 
war,  and  carriers  shall  adopt  every  means  within  their 
control  to  facilitate  and  expedite  the  military  traf- 
fic. 

The  Commission  may  reject  and  refuse  to  file  any 
schedule  that  is  tendered  for  filing  which  does  not  pro- 
vide and  give  lawful  notice  of  its  effective  date,  and 
any  schedule  so  rejected  by  the  Commission  shall  be 
void  and  its  use  shall  be  unlawful. 

In  case  of  failure  or  refusal  on  the  part  of  any  car- 
rier, receiver,  or  trustee  to  comply  with  the  terms  of 
any  regulation  adopted  and  promulgated  or  any  order 
made  by  the  Commission  under  the  provisions  of  this 
section,  such  carrier,  receiver,  or  trustee  shall  be  liable 
to  a  penalty  of  five  hundred  dollars  for  each  such  of- 
fense, and  twenty-five  dollars  for  each  and  every  day 
of  the  continuance  of  such  offense,  which  shall  accrue 
to  the  United  States  and  may  be  recovered  in  a  civil 
action  brought  by  the  United  States. 

If  any  common  carrier  subject  to  the  provisions  of 
this  Act,  after  written  request  made  upon  the  agent  of 
such  carrier  hereinafter  in  this  section  referred  to,  by 
any  person  or  company  for  a  written  statement  of  the 
rate  or  charge  applicable  to  a  described  shipment  be- 
tween stated  places  under  the  schedules  or  tariffs  to 
which  such  carrier  is  a  party,  shall  refuse  or  omit  to 
give  such  written  statement  within  a  reasonable  time, 
or  shall  misstate  in  writing  the  applicable  rate,  and  if 
the  person  or  company  making  such  request  suffers 
damage  in  consequence  of  such  refusal  or  omission  or 
in  consequence  of  the  misstatement  of  the  rate,  either 
through  making  the  shipment  over  a  line  or  route  for 
which  the  proper  rate  is  higher  than  the  rate  over  an- 
other available  line  or  route,  or  through  entering  into 
any  sale  or  other  contract  whereunder  such  person  or 
company  obligates  himself  or  itself  to  make  such  ship- 
ment of  freight  at  his  or  its  cost,  then  the  said  car- 
rier shall  be  liable  to  a  penalty  of  two  hundred  and 
fifty  dollars,  which  shall  accrue  to  the  United  States 


P  r  e  f  e  rence 
and  expedition 
of  military 
traffic  in  time 
of  war. 


A  m  e  ndment 
of  June  18, 
1910. 

C  o  m  m  ission 
may  reject  cer- 
tain  schedules. 


Penalty  for 
failure  to  com- 
ply with  regu- 
lation. 


Carrier  t  o 
furnish  written 
statement  of 

rate. 


Penalty  for 
m  i  s  s  t  atement 
of  rate. 


494  APPENDIX. 

and  may  be  recovered  in  a  civil  action  brouglit  by  the 
United  States. 
Name  of  car-       j^  shall  be  the  dutv  of  every  carrier  by  railroad  to 

ner  s    agent    to  i  i    ■ 

be  posted.  keep  at  all  times  consjDicuously  posted  m  every  station 

where  freight  is  received  for  transportation  the  name 
of  an  agent  resident  in  the  city,  village,  or  town  where 
such  station  is  located,  to  whom  application  may  be 
made  for  the  information  by  this  section  required  to 
be  furnished  on  written  request ;  and  in  case  any  car- 
rier shall  fail  at  any  time  to  have  such  name  so  posted 
in  any  station,  it  shall  be  sufficient  to  address  such  re- 
quest in   substantially  the   following   form :     "  The 

Station  Agent  of  the Company  at Station," 

together  with  the  name  of  the  proper  post  office,  in- 
serting the  name  of  the  carrier  company  and  of  the 
station  in  the  blanks,  and  to  serve  the  same  by  de- 
positing the  request  so  addressed,  with  postage  thereon 
prepaid,  in  any  post  office. 
■^  ™  e  ndment       When  property  may  be  or  is  transported  from  point 

1912.  '  to   point   in  the   United   States   by   rail   and   water 

through  the  Panama  Canal  or  otherwise,  the  trans- 
portation being  by  a  common  carrier  or  carriers,  and 
not  entirely  within  the  limits  of  a  single  State,  the  In- 
c  o  m  mission  terstate  Commerce  Commission  shall  have  iurisdiction 

has       junsdic-  .  "" 

tion    over    rail  of  such  transportation  and  of  the  carriers,  both  by  rail 

and   water   traf-  ,  i  •    i  ^  ■      j_i  ■ 

fie    in    certain  and  by  Water,  which  may  or  do  engage  m  the  same,  m 
par  icu  ars.  ^^^^  following  particulars,  in  addition  to  the  jurisdic- 

tion  given   by   the   Act   to   regulate   commerce,    as 
amended  June  eighteenth,  nineteen  hundred  and  ten : 
Physical  con-       z^)   To  establish  physical  connection  between  the 

n  e  c  1 1  o  n      be-  ^     '  i     j 

tween  rail  lines  lines  of  the  rail  Carrier  and  the  dock  of  the  water  car- 
water  carriers,  rier  by  directing  the  rail  carrier  to  make  suitable  con- 
nection between  its  line  and  a  track  or  tracks  which 
have  been  constructed  from  the  dock  to  the  limits  of 
its  right  of  way,  or  by  directing  either  or  both  the  rail 
and  water  carrier,  individually  or  in  connection  with 
one  another,  to  construct  and  connect  with  the  lines  of 
the  rail  carrier  a  spur  track  or  tracks  to  the  dock. 
This  provision  shall  only  apply  where  such  connection 
is  reasonably  practicable,  can  be  made  with  safety  to 
the  public,  and  where  the  amount  of  business  to  be 
handled  is  sufficient  to  justify  the  outlay. 

The  Commission  shall  have  full  authority  to  deter- 
mine the  terms  and  conditions  upon  which  these  con- 


APPENDIX. 


495 


necting  tracks,  when  constructed,  shall  be  operated, 
and  it  may,  either  in  the  construction  or  the  opera- 
tion of  such  tracks,  determine  what  sum  shall  be 
paid  to  or  by  either  carrier.  The  provisions  of  this 
paragraph  shall  extend  to  cases  where  the  dock  is 
owned  by  other  parties  than  the  carrier  involved. 

(b)  To  establish  through  routes  and  maximum 
joint  rates  between  and  over  such  rail  and  water  lines, 
and  to  determine  all  the  terms  and  conditions  under 
whicli  such  lines  shall  be  operated  in  the  handling  of 
the  traffic  embraced. 

(c)  To  establish  maximum  proportional  rates  by 
rail  to  and  from  the  ports  to  which  the  traffic  is 
brought,  or  from  which  it  is  taken  by  the  water  car- 
rier, and  to  determine  to  what  traffic  and  in  connec- 
tion with  what  vessels  and  upon  what  terms  and  con- 
ditions such  rates  shall  apply.  By  proportional  rates 
are  meant  those  which  differ  from  the  corresponding 
local  rates  to  and  from  the  port  and  which  apply  only 
to  traffic  which  has  been  brought  to  the  port  or  is  car- 
ried from  the  port  by  a  common  carrier  by  water. 

(d)  If  any  rail  carrier  subject  to  the  Act  to  regu- 
late commerce  enters  into  arrangements  with  any 
water  carrier  operating  from  a  port  in  the  United 
States  to  a  foreign  country,  through  the  Panama 
Canal  or  otherwise,  for  the  handling  of  through  busi- 
ness between  interior  points  of  the  United  States  and 
such  foreign  country,  the  Interstate  Commerce  Com- 
mission may  require  such  railway  to  enter  into  sim- 
ilar arrangements  with  any  or  all  other  lines  of 
steamships  operating  from  said  port  to  the  same  for- 
eign country. 

The  orders  of  the  Interstate  Commerce  Commission 
relating  to  this  section  shall  only  be  made  upon  for- 
mal complaint  or  in  proceedings  instituted  by  the 
Commission  of  its  own  motion  and  after  full  hear- 
ing. The  orders  provided  for  in  the  two  amend- 
ments to  the  Act  to  regulate  commerce  enacted  in 
this  section  shall  be  served  in  the  same  manner  and 
enforced  by  the  same  penalties  and  proceedings  as  are 
the  orders  of  the  Commission  made  under  the  pro- 
visions of  section  fifteen  of  the  Act  to  regulate  com- 
merce, as  amended  June  eighteenth,  nineteen  hun- 
dred and  ten,  and  they  may  be  conditioned  for  the 


Com  mission 
may  determine 
terms  and  con- 
ditions of  con- 
struction and 
operation. 


Through 
routes  and  joint 
rates  between 
rail  and  water 
carriers. 


Pro  portional 
rates  to  and 
from  ports. 


Through 
routes  and  joint 
rates  between 
rail  and  water 
carriers  from  a 
port  in  the 
United  States 
to  a  foreign 
country  v  i  a 
Canal. 


Pro  ceedings 
before  the  Com- 
mission to  en- 
force these 
amendments. 


496  APPENDIX. 

payment  of  any  sum  or  the  giving  of  security  for  the 
payment  of  any  sum  or  the  discharge  of  any  obliga- 
tion which  may  be  required  by  the  terms  of  said  order. 
Sec.  7.  That  it  shall  be  unlawful  for  any  common 
carrier  subject  to  the  provisions  of  this  Act  to  enter 
into  any  combination,  contract,  or  agreement,  ex- 
pressed or  implied,  to  prevent,  by  change  of  time 
schedule,  carriage  in  different  cars,  or  by  other  means 
or  devices,  the  carriage  of  freights  from  being  con- 
tinuous from  the  place  of  shipment  to  the  place  of 
destination;  and  no  break  of  bulk,  stoppage,  or  in- 
terruption made  by  such  common  carrier  shall  prevent 
the  carriage  of  freights  from  being  and  being  treated 

Carriage      of  as  One  coutinuous  carriage  from  the  place  of  ship- 
freights  must  be  ,>-,,•,■  i  i     i         i 

treated  as  con-  mcut  to  the  place  of  destination,  unless  such  breaK, 
stoppage  "is  ^^n  stoppage,  Or  interruption  was  made  in  good  faith  for 
good  faith.  ^^^^^^  necessary  purpose,  and  without  any  intent  to 

avoid  or  unnecessarily  interrupt  such  continuous  car- 
riage or  to  evade  any  of  the  provisions  of  this  Act. 

Sec.  8.  That  in  case  any  common  carrier  subject  to 
the  provisions  of  this  Act  shall  do,  cause  to  be  done,  or 
permit  to  be  done  any  act,  matter,  or  thing  in  this 
Act  prohibited  or  declared  to  be  unlawful,  or  shall 
omit  to  do  any  act,  matter,  or  thing  in  this  Act  re- 
quired to  be  done,  such  common  carrier  shall  be  liable 
Liability     of  to  the  persou  or  persons  injured  thereby  for  the  full 

common    car-  J-  ^  .        ,    .  » 

riers   for   dam-  amouut  of  damages  sustained  m  consequence  o±  any 

vfoTatio^n  o^f  this  such  violation  of  the  provisions  of  this  Act,  together 

**'*■  with  a  reasonable  counsel  or  attorney's  fee,  to  be  fixed 

by  the  court  in  every  case  of  recovery,  which  attorney's 

fee  shall  be  taxed  and  collected  as  part  of  the  costs  in 

the  case. 

Persons       gjjQ^  9^  That  any  person  or  persons  claiming  to  be 

claiming    to    be  -^    '■  •  1   •      1    i       j.i 

damaged    may  damaged  by  any  common  carrier  subject  to  the  pro- 

to   complain   to  visions  of  this  Act  may  either  make  complaint  to  the 

l^on^  or"  "bring  Comiiiission  as  hereinafter  provided  for,  or  may  bring 

United    'states  suit  in  his  or  their  own  behalf  for  the  recovery  of 

'^°^^^-  the  damages  for  which  such  common  carrier  may  be 

liable  under  the  provisions  of  this  Act,  in  any  district 

or  circuit  court  of  the  United  States  of  competent 

jurisdiction ;  but  such  person  or  persons  shall  not  have 

the  right  to  pursue  both  of  said  remedies,  and  must 

in  each  case  elect  which  one  of  the  two  methods  of 

procedure  herein  provided  for  he  or  they  will  adopt. 


APPENDIX.  497 

In  any  such  action  brought  for  the  recovery  of  dam- 
ages the  court  before  which  the  same  shall  be  pending 
may  compel  any  director,  officer,  receiver,  trustee,  or  ^egndant    may 
agent  of  the  corporation  or  company  defendant  in  be  compeiied^^o 
such  suit  to  attend,  appear,  and  testify  in  such  case,  ?^^^M^y|-eceive 
and  may  compel  the  production  of  the  books  and 
papers  of  such  corporation  or  company  party  to  any 
such  suit;  the  claim  that  any  such  testimony  or  evi- 
dence may  tend  to  criminate  the  person  giving  such 
evidence  shall  not  excuse  such  witness  from  testify- 
ing, but  such  evidence  or  testimony  shall  not  be  used 
ag-ainst  such  person  on  the  trial  of  any  criminal  pro- 
ceeding". 

Sec!  10.   (As  amended  March  2,  1889,  and  June  ^.^^^^^^^l'^  ^^\ 
18,  1910.)  That  any  common  carrier  subject  to  the  Act  by^carriers 


the 
carrier    is 


provisions  of  this  Act,  or,  whenever  such  common  car 

■I  Tj_  02  XI  J?  corporation,     its 

rier  is  a  corporation,  any  director  or  oriicer  tnereoi,  or  officers,  agents, 
any  receiver,  trustee,  lessee,  agent,  or  person  acting  p-ne  *"^nd^^^m- 
for  or  employed  by  such  corporation,  who,  alone  or  prisonment. 
with  any  other  corporation,  company,  person,  or  party, 
shall  willfully  do  or  cause  to  be  done,  or  shall  will- 
ingly suffer  or  permit  to  be  done,  any  act,  matter,  or 
thing  in  this  Act  prohibited  or  declared  to  be  unlaw- 
ful, or  who  shall  aid  or  abet  therein,  or  shall  willfully 
omit  or  fail  to  do  any  act,  matter,  or  thing  in  this 
Act  required  to  be  done,  or  shall  cause  or  willingly 
suffer  or  permit  any  act,  matter,  or  thing  so  directed 
or  required  by  this  Act  to  be  done  not  to  be  so  done, 
or  shall  aid  or  abet  any  such  omission  or  failure,  or 
shall  be  guilty  of  any  infraction  of  this  Act  for  which 
no  penalty  is  otherwise  provided,  or  who  shall  aid  or 
abet  therein,  shall  be  deemed  guilty  of  a  misdemeanor, 
and  shall,  upon  conviction  thereof  in  any  district 
court  of  the  United  States  within  the  jurisdiction  of 
which  such  offense  was  committed,  be  subject  to  a 
fine  of  not  to  exceed  five  thousand  dollars  for  each 
offense:  Provided,  That  if  the  offense  for  which  any 
person  shall  be  convicted  as  aforesaid  shall  be  an  un- 
lawful discrimination  in  rates,  fares,  or  charges  for 
the  transportation  of  passengers  or  property,  such  per- 
son shall,  in  addition  to  the  fine  hereinbefore  provided 
for,  be  liable  to  imprisonment  in  the  penitentiary  for 
a  term  of  not  exceeding  two  years,  or  both  such  fine 
and  imprisonment,  in  the  discretion  of  the  court. 


498  APPENDIX. 

Penalties   for       ^jjy  common  Carrier  subject  to  the  provisions  of 

false     billing,  J  "  ^  .         . 

etc.,     by     car-  tliis  Act,  or,  whenever  such  common  carrier  is  a  cor- 
ners,   their   offi-  ,  .  ^^  i    j_i  j? 

cers  or  agents:  poration,  aiij  Officer  or  agent  thereol,  or  any  person 
prfsonme'nt.  '"^  acting  for  or  employed  by  such  corporation,  who,  by 
means  of  false  billing,  false  classification,  false  weigh- 
ing, or  false  report  of  weight,  or  by  any  other  device 
or  means,  shall  knowingly  and  willfully  assist,  or  shall 
willingly  suffer  or  permit,  any  person  or  persons  to  ob- 
tain transportation  for  property  at  less  than  the  regu- 
lar rates  then  established  and  in  force  on  the  line  of 
transportation  of  such  common  carrier,  shall  be 
deemed  guilty  of  a  misdemeanor,  and  shall,  upon  con- 
viction thereof  in  any  court  of  the  United  States  of 
competent  jurisdiction  within  the  district  in  which 
such  offense  was  committed,  be  subject  to  a  fine  of  not 
exceeding  five  thousand  dollars,  or  imprisonment  in 
the  penitentiary  for  a  term  of  not  exceeding  two  years, 
or  both,  in  the  discretion  of  the  court,  for  each  offense, 
f  a'^^"e^*'biiiin*"'  ^"'^^  pcrson.  Corporation,  or  company,  or  any  agent 
etc.,    by    ship-  or  officer  thereof,  who  shall  deliver  property  for  trans- 

pers    and    other  '  .  i   •      i   1      j  i 

persons:      Fine  portatioH  to  any  common  carrier  subject  to  the  pro- 

and        imprison-       .    .  p  jt   •       a     _l  ^  t 

ment.  visions  01  this  Act,  or  lor  whom,  as  consignor  or  con- 

signee, any  such  carrier  shall  transport  property,  who 
shall  knowingly  and  willfully,  directly  or  indirectly, 
himself  or  by  employee,  agent,  officer,  or  otherwise, 
by  false  billing,  false  classification,  false  weighing, 
false  representation  of  the  contents  of  the  package  or 
the  substance  of  the  property,  false  report  of  weight, 
false  statement,  or  by  any  other  device  or  means, 
whether  with  or  without  the  consent  or  connivance 
of  the  carrier,  its  agent,  or  officer,  obtain  or  attempt 
to  obtain  transportation  for  such  property  at  less 
than  the  regular  rates  then  established  and  in  force  on 
the  line  of  transportation ;  or  who  shall  knowingly 
and  willfully,  directly  or  indirectly,  himself  or  by  em- 
ployee, agent,  officer,  or  otherwise,  by  false  statement 
or  representation  as  to  cost,  value,  nature,  or  extent 
of  injury,  or  by  the  use  of  any  false  bill,  bill  of  lad- 
ing, receipt,  voucher,  roll,  account,  claim,  certificate, 
affida\it,  or  deposition,  knowing  the  same  to  be  false, 
fictitious,  or  fraudulent,  or  to  contain  any  false,  ficti- 
tious, or  fraudulent  statement  or  entry,  obtain  or  at- 
tempt to  obtain  any  allowance,  refund,  or  payment 
for  damage  or  otherwise  in  connection  with  or  grow- 


APPENDIX, 


499 


ing  out  of  the  transportation  of  or  agreement  to  trans- 
port such  property,  whether  with  or  without  the  con- 
sent or  connivance  of  the  carrier,  whereby  the  com- 
pensation of  such  carrier  for  such  transportation, 
either  before  or  after  payment,  shall  in  fact  be  made 
less  than  the  regular  rates  then  established  and  in 
force  on  the  line  of  transportation,  shall  be  deemed 
guilty  of  fraud,  which  is  hereby  declared  to  be  a  mis- 
demeanor, and  shall,  upon  conviction  thereof  in  any 
court  of  the  United  States  of  competent  jurisdiction 
within  the  district  in  which  such  oifense  was  wholly  or 
in  part  committed,  be  subject  for  each  offense  to  a 
fine  of  not  exceeding  five  thousand  dollars  or  impris- 
onment in  the  penitentiary  for  a  term  of  not  exceed- 
ing two  years,  or  both,  in  the  discretion  of  the  court : 
Provided,  That  the  penalty  of  imprisonment  shall  not 
apply  to  artificial  persons. 

If  any  such  person,  or  any  officer  or  agent  of  any 
such  corporation  or  company,  shall,  by  payment  of 
money  or  other  thing  of  value,  solicitation,  or  other- 
wise, induce  or  attempt  to  induce  any  common  car- 
rier subject  to  the  provisions  of  this  Act,  or  any  of 
its  officers  or  agents,  to  discriminate  unjustly  in  his, 
its,  or  their  favor  as  against  any  other  consignor  or 
consignee  in  the  transportation  of  property,  or  shall 
aid  or  abet  any  common  carrier  in  any  such  unjust 
discrimination,  such  person  or  such  officer  or  agent  of 
such  corporation  or  company  shall  be  deemed  guilty 
of  a  misdemeanor,  and  shall,  upon  conviction  thereof 
in  any  court  of  the  United  States  of  competent  juris- 
diction within  the  district  in  which  such  offense  was 
committed,  be  subject  to  a  fine  of  not  exceeding  five 
thousand  dollars,  or  imprisonment  in  the  penitentiary 
for  a  term  of  not  exceeding  two  years,  or  both,  in  the 
discretion  of  the  court,  for  each  offense ;  and  such  per- 
son, corporation,  or  company  shall  also,  together  with 
said  common  carrier,  be  liable,  jointly  or  severally,  in 
an  action  to  be  brought  by  any  consignor  or  consignee 
discriminated  against  in  any  court  of  the  United 
States  of  competent  jurisdiction  for  all  damages 
caused  by  or  resulting  therefrom. 

Sec.  11.  That  a  Commission  is  hereby  created  and 
established  to  be  known  as  the  Interstate  Commerce 
Commission,  which  shall  be  composed  of  five  Commis- 


Penalties  for 
inducing  com- 
m  o  n  carriers 
to  discriminate 
unjustly:  Fine 
and  imprison- 
ment. Joint  li- 
ability with  car- 
rier    for     dam- 


In  t  e  r  s  t&te 
Commerce 
C  o  m  m  i  s  sion- 
ers  —  method  of 
a  p  p  o  i  n  tment 
and  terms. 


500  APPEXDIX. 

sioners,  who  shall  be  appointed  by  the  President,  by 
and  with  the  advice  and  consent  of  the  Senate.  The 
Commissioners  first  appointed  under  this  Act  shall 
continue  in  office  for  the  term  of  two,  three,  four, 
five,  and  six  years,  respectively,  from  the  first  day  of 
January,  Anno  Domini  eighteen  hundred  and  eighty- 
seven,  the  term  of  each  to  be  designated  by  the  Presi- 
dent; but  their  successors  shall  be  appointed  for 
terms  of  six  years,  except  that  any  person  chosen  to 
fill  a  vacancy  shall  be  appointed  only  for  the  unex- 
pired time  of  the  Commissioner  whom  he  shall  suc- 
ceed. Any  Commissioner  may  be  removed  by  the 
President  for  inefficiency,  neglect  of  duty,  or  malfeas- 
ance in  office.  Not  more  than  three  of  the  Commis- 
sioners shall  be  appointed  from  the  same  political 
party.  No  person  in  the  employ  of  or  holding  any 
official  relation  to  any  common  carrier  subject  to  the 
provisions  of  this  Act,  or  owning  stock  or  bonds 
thereof,  or  who  is  in  any  manner  pecuniarily  inter- 
ested therein,  shall  enter  upon  the  duties  of  or  hold 
such  office.  Said  Commissioners  shall  not  engage  in 
any  other  business,  vocation,  or  employment.  No 
vacancy  in  the  Commission  shall  impair  the  right  of 
the  remaining  Commissioners  to  exercise  all  the  pow- 
ers of  the  Commission.  (See  section  24,  enlarging 
Commission  and  increasing  salaries.) 
Commission       gj^c.  12.   (As  amended  March  2,  1889,  and  Fel- 

to    inquire    into  '^ 

business  of  car-  ruarij  10,  1891.)  That  the  Commission  hereby  cre- 
itseif    informed  ated  shall  havc  authority  to  inquire  into  the  manage- 
thereto^  ^^^"^     ment  of  the  business  of  all  common  carriers  subject 
to  the  provisions  of  this  Act,  and  shall  keep  itself  in- 
formed as  to  the  manner  and  method  in  which  the 
same  is  conducted,  and  shall  have  the  right  to  obtain 
Commission  fi-Qm  sucli  comiiion  Carriers  full  and  complete  infor- 

to    execute    and  i  i       i       ,-i  ■      •         •  £ 

enforce     provi-  matiou  neccssary  to  enable  the  Commission  to  pertorm 
Act.  the  duties  and  carry  out  the  objects  for  which  it  was 

created;  and  the  Commission  is  hereby  authorized 
and  required  to  execute  and  enforce  the  provisions  of 
this  Act ;  and,  upon  the  request  of  the  Commission,  it 
shall  be  the  duty  of  any  district  attorney  of  the 
District  attor-  United  States  to  whom  the  Commission  may  apply 

neys     to     prose-  ,  -i   ,  i"  j 

cute   under   di-  to  institute  in  the  proper  court  and  to  prosecute  under 

torney'^  General,  the  direction  of  the  Attorney  General  of  the  United 

States  all  necessary  proceedings  for  the  enforcement 


APPENDIX. 


501 


of  the  provisions  of  this  Act  and  for  the  punishment 
of  all  violations  thereof,  and  the  costs  and  expenses 
of  such  prosecution  shall  be  paid  out  of  the  appropria- 
tion for  the  expenses  of  the  courts  of  the  United 
States;  and  for  the  purposes  of  this  Act  the  Com- 
mission shall  have  power  to  require,  by  subpoena,  the 
attendance  and  testimony  of  witnesses  and  the  pro- 
duction of  all  books,  papers,  tariffs,  contracts,  agree- 
ments, and  documents  relating  to  any  matter  under 
investigation. 

Such  attendance  of  witnesses,  and  the  production 
of  such  documentary  evidence,  may  be  required  from 
any  place  in  the  United  States,  at  any  designated 
place  of  hearing.  And  in  case  of  disobedience  to  a 
subpoena  the  Commission,  or  any  party  to  a  proceed- 
ing before  the  Commission,  may  invoke  the  aid  of 
any  court  of  the  United  States  in  requiring  the  at- 
tendance and  testimony  of  witnesses  and  the  produc- 
tion of  books,  papers,  and  documents  under  the  pro- 
visions of  this  section. 

And  any  of  the  circuit  courts  of  the  United  States 
within  the  jurisdiction  of  which  such  inquiry  is  car- 
ried on  may,  in  case  of  contumacy  or  refusal  to  obey 
a  subpoena  issued  to  any  common  carrier  subject  to 
the  provisions  of  this  Act,  or  other  person,  issue  an 
order  requiring  such  common  carrier  or  other  person 
to  appear  before  said  Commission  (and  produce 
books  and  papers  if  so  ordered)  and  give  evidence 
touching  the  matter  in  question;  and  any  failure  to 
obey  such  order  of  the  court  may  be  punished  by  such 
court  as  a  contempt  thereof.  The  claim  that  any 
such  testimony  or  evidence  may  tend  to  criminate  the 
person  giving  such  evidence  shall  not  excuse  such  wit- 
ness from  testifying;  but  such  evidence  or  testimony 
shall  not  be  used  against  such  person  on  the  trial  of 
any  criminal  proceeding. 

The  testimony  of  any  witness  may  be  taken,  at  the 
instance  of  a  party,  in  any  proceeding  or  investiga- 
tion pending  before  the  Commission,  by  deposition, 
at  any  time  after  a  cause  or  proceeding  is  at  issue 
on  petition  and  answer.  The  Commission  may  also 
order  testimony  to  be  taken  by  deposition  in  any  pro- 
ceeding or  investigation  pending  before  it,  at  any 
stage    of    such    proceeding    or    investigation.     Such 


C  0  mm  ission 
may  require 
testimony  and 
d  o  c  u  m  entary 
evidence. 


Courts  to 
compel  wit- 
nesses to  attend 
and  testify. 


Claim  that 
testimony  o  r 
evidence  will 
tend  to  crimi- 
nate will  not 
excuse  witness. 


Depositions. 


C  o  m  m  ission 
may  order  tes- 
timony to  be 
taken  by  depo- 
sition. 


503  APPENDIX. 

depositions  may  be  taken  before  any  judge  of  any 
court  of  the  United  States,  or  any  commissioner  of  a 
circuit,  or  any  clerk  of  a  district  or  circuit  court,  or 
any  chancellor,  justice,  or  judge  of  a  supreme  or 
superior  court,  mayor  or  chief  magistrate  of  a  city, 
judge  of  a  county  court,  or  court  of  common  pleas  of 
any  of  the  United  States,  or  any  notary  public,  not 
being  of  counsel  or  attorney  to  either  of  the  parties, 
nor  interested  in  the  event  of  the  proceeding  or  in- 
vestigation. Eeasonable  notice  must  first  be  given 
in  writing  by  the  party  or  his  attorney  proposing  to 
take  such  deposition  to  the  opposite  party  or  his 
attorney  of  record,  as  either  may  be  nearest,  which 
notice  shall  state  the  name  of  the  witness  and 
the  time  and  place  of  the  taking  of  his  deposition. 
Any  person  may  be  compelled  to  appear  and 
depose,  and  to  produce  documentary  evidence,  in 
the  same  manner  as  witnesses  may  be  compelled  to 
appear  and  testify  and  produce  documentary  evi- 
dence before  the  Commission  as  hereinbefore  pro- 
vided. 

Every  person  deposing  as  herein  provided  shall  be 
cautioned  and  sworn  (or  affirm,  if  he  so  request)  to 
testify  the  whole  truth,  and  shall  be  carefully  ex- 
amined. His  testimony  shall  be  reduced  to  writing 
by  the  magistrate  taking  the  deposition,  or  under  his 
direction,  and  shall,  after  it  has  been  reduced  to  writ- 
ing, be  subscribed  by  the  deponent. 
_  When  witness       jf  ^  witucss  wliose  testimony  may  be  desired  to  be 

IS   in    a    foreign  ,.        . 

country.  taken  by  deposition  be  m  a  foreign  country,  the  depo- 

sition may  be  taken  before  an  officer  or  person  desig- 
nated by  the  Commission,  or  agreed  upon  by  the 
parties  by  stipulation  in  writing  to  be  filed  with  the 
Commission.  All  depositions  must  be  promptly  filed 
with  the  Commission. 
Fees  of  wit-       Witnesses  whose  depositions  are  taken  pursuant  to 

nesses  and  mag-  ^  nn  t  ■ 

istrates.  this  Act,  and  the  magistrate  or  other  officer  taking 

the  same,  shall  severally  be  entitled  to  the  same  fees 

as  are  paid  for  like  services  in  the  courts  of  the  United 

States. 

Complaints  to       gj^c.   13.     (As  amended  June  18,  1910.)     That 

C  0  m  m  IS  s  ion.  ^  '  '  ^ 

How     and    by  any  person,  firm,  corporation,  company,  or  associa- 

whom       made.    .  .  •'     ^  , -i  •      i,         i  p      ± 

How  served.        tion,  or  any  mercantile,  agricultural,  or  manuiactur- 
ing  society  or  other  organization,  or  any  body  politic 


APPENDIX. 


503 


C  o  m  m  ission 
to  have  dis- 
cretion     as      to 


or  municipal  organization,  or  any  common  carrier, 
complaining  of  anything  done  or  omitted  to  be  done 
by  any  common  carrier  subject  to  the  provisions  of 
this  Act,  in  contravention  of  the  provisions  thereof, 
may  apply  to  said  Commission  by  petition,  which 
shall  briefly  state  the  facts;  whereupon  a  statement 
of  the  complaint  thus  made  shall  be  forwarded  by  the 
Commission  to  such  common  carrier,  who  shall  be 
called  upon  to  satisfy  the  complaint,  or  to  answer  the 
same  in  writing,  within  a  reasonable  time,  to  be 
specified  by  the  Commission,  If  such  common  car- 
rier within  the  time  specified  shall  make  reparation 
for  the  injury  alleged  to  have  been  done,  the  com-  ^^^^^^  ^^ 
mon  carrier  shall  be  relieved  of  liability  to  the  com-  vestigation. 
plainant  only  for  the  particular  violation  of  law 
thus  complained  of.  If  such  carrier  or  carriers  shall 
not  satisfy  the  complaint  within  the  time  specified, 
or  there  shall  appear  to  be  any  reasonable  ground  for 
investigating  said  complaint,  it  shall  be  the  duty  of 
the  Commission  to  investigate  the  matters  complained 
of  in  such  manner  and  by  such  means  as  it  shall  deem 
proper. 

Said  Commission  shall,  in  like  manner  and  with 
the  same  authority  and  powers,  investigate  any  com- 
plaint forwarded  by  the  railroad  commissioner  or  rail- 
road commission  of  any  State  or  Territory  at  the  re- 
quest of  such  commissioner  or  commission,  and  the 
Interstate  Commerce  Commission  shall  have  full  au- 
thority and  power  at  any  time  to  institute  an  inquiry, 
on  its  own  motion,  in  any  case  and  as  to  any  matter 
or  thing  concerning  which  a  complaint  is  authorized 
to  be  made,  to  or  before  said  Commission  by  any  pro- 
vision of  this  Act,  or  concerning  which  any  question 
may  arise  under  any  of  the  provisions  of  this  Act, 
or  relating  to  the  enforcement  of  any  of  the  provis- 
ions of  this  Act.  And  the  said  Commission  shall 
have  the  same  powers  and  authority  to  proceed  with 
any  inquiry  instituted  on  its  own  motion  as  though 
it  had  been  appealed  to  by  complaint  or  petition  un- 
der any  of  the  provisions  of  this  Act,  including  the 
power  to  make  and  enforce  any  order  or  orders  in  the 
case,  or  relating  to  the  matter  or  thing  concerning 
which  the  inquiry  is  had  excepting  orders  for  the 
payment  of  money.     No  complaint  shall  at  any  time 


C  0  m  m  ission 
may  issue  or- 
ders in  investi- 
gations begun 
on  its  own  mo- 
tion. 


504  APPENDIX. 

Complain-  j^g  dismissed  because  of  the  absence  of  direct  damaffe 

ants  interest  .  ° 

immaterial.  to  the  Complainant. 

Sec.  14.     (Amended  March  2,  1889,  and  June  29, 
Commission  '1906.)     That    whenever    an    investisration    shall    be 

must       report,  -'  ° 

stating  its  con-  made  by  said  Commission,  it  shall  be  its  duty  to 
order.  make  a  report  in  writing  in  respect  thereto,  which 

shall  state  the  conclusions  of  the  Commission,  together 

with  its  decision,  order,  or  requirement  in  the  prem- 
Reparation.      iggg ;  and  in  case  damages  are  awarded  such  report 

shall  include  the  findings  of  fact  on  which  the  award 

is  made. 

Reports  must       ^i  peports  of  investigations  made  by  the   Com- 
be    entered     of  J^  "  i  i> 

record.  Serv-  missiou  shall  be  entered  of  record,  and  a  copy  thereof 
parties.  shall  be  furnished  to  the  party  who  may  have  com- 

plained, and  to  any  common  carrier  that  may  have 
been  complained  of. 
Reports    and       'j^\^q  Commission  may  provide  for  the  publication 

decisions    to    be  ./     i.  i 

published,  and  of  its  Tcports  and  decisious  in  such  form  and  man- 
as  evidence.  ner  as  may  be  best  adapted  for  public  information  and 
use,  and  such  authorized  publications  shall  be  com- 
petent evidence  of  the  reports  and  decisions  of  the 
Commission  therein  contained  in  all  courts  of  the 
United  States  and  of  the  several  States  without  any 
further  proof  or  authentication  thereof.  The  Com- 
-^J^^^^}   ^  ^^"  mission  may  also  cause  to  be  printed  for  early  distri- 

ports     of     Com-  -^  r  j 

mission.  butiou  its  annual  reports. 

Sec  15.     (As  ainended  June  29,  1906,  and  June 

18, 1910.)     That  whenever,  after  full  hearing  upon  a 

c  o  m  m  ission  complaint  made  as  provided  in  section  thirteen  of  this 

may      determine  ^  ^ 

and  prescribe  Act,  or  after  full  hearing  under  an  order  for  inves- 
sonabie    r  a  t  es  tigatiou  and  hearing  made  by  the  Commission  on  its 

and       classifica-  .....  /    -ii  •  "i  •  r>  ^■ 

tions  to  be  ob-  owu  initiative  (either  m  extension  ot  any  pending 
milL^ charges!^'  Complaint  or  without  any  complaint  whatever),  the 
Commission  shall  be  of  opinion  that  any  individual 
or  joint  rates  or  charges  whatsoever  demanded, 
charged,  or  collected  by  any  common  carrier  or  car- 
riers subject  to  the  provisions  of  this  Act  for  the 
transportation  of  persons  or  property  or  for  the  trans- 
mission of  messages  by  telegraph  or  telephone  as  de- 
fined in  the  first  section  of  this  Act,  or  that  any  in- 
dividual or  joint  classifications,  regulations,  or  prac- 
tices whatsoever  of  such  carrier  or  carriers  subject  to 
the  provisions  of  this  Act  are  unjust  or  unreasonable 
or  unjustly  discriminatory,  or  unduly  preferential  or 


APPENDIX. 


505 


prejudicial  or  otherwise  in  violation  of  any  of  the 
provisions  of  this  Act,  the  Commission  is  hereby  au- 
thorized and  empowered  to  determine  and  prescribe  ^,3^°  "^eTermine 

prescribe 
and     rea- 


what  will  be  the  Just  and  reasonable  individual  or  an 


two 


Orders 
force  not 
Deeding 
years,  unless 
suspended  o  r 
set  aside  by 
Commission  or 
court. 


just      

ioint  rate  or  rates,  charge  or  charges,  to  be  thereafter   sonabie      regu 

J  ■'  "  ■  1      1         1  -jlationso] 

observed  in  such  case  as  the  maximum  to  be  cnargecl,  practices, 
and  what  individual  or  joint  classification,  regulation,  nia°y™order  car- 
er practice  is  just,  fair,  and  reasonable,  to  be  there-  a'nTdel?st  Trom 
after  followed,  and  to  make  an  order  that  the  carrier  jj^^l  ^  ^orderl 
or  carriers  shall  cease  and  desist  from  such  violation  of     the     Com- 

r.     T       1  mission      efifect- 

to  the  extent  to  which  the  Commission  finds  the  same   i  v  e   a  s   p  r  e  - 
to  exist,  and  shall  not  thereafter  publish,  demand,  or  not    less    than 
collect  any  rate  or  charge  for  such  transportation  or  *  ^^^^   ^^^' 
transmission    in    excess    of    the    maximum    rate    or 
charge  so  prescribed,  and  shall  adopt  the  classifica- 
tion and  shall  conform  to  and  observe  the  regulation 
or  practice  so  prescribed.     All  orders  of  the  Commis- 
sion, except  orders  for  the  payment  of  money,  shall 
take  effect  within  such  reasonable  time,  not  less  than 
thirty  days,  and  shall  continue  in  force  for  such  pe- 
riod of  time,  not  exceeding  two  years,  as  shall  be  pre- 
scribed in  the  order  of  the  Commission,  unless  the 
same  shall  be  suspended  or  modified  or  set  aside  by 
the  Commission,  or  be  suspended  or  set  aside  by  a 
court  of  competent  jurisdiction.     Whenever  the  car- 
rier or  carriers,  in  obedience  to  such  order  of  the  rie^^*'f  a  i^'i^V 
Commission  or  otherwise,  in  respect  to  joint  rates,   a.g^e    on    div^i^ 
fares,  or  charges,  shall  fail  to  agree  among  themselves  rate,      commis- 

'  o     ;>  !r  .  ,,  p    .-,       ^  sion     may     pre- 

unon  the  apportionment  or  division  thereoi  the  Lom-  scribe     propor- 

.      .  ~.        -,  ■  1  1  J.    1  tion      of       such 

mission  may,  after  hearing,  make  a  supplemental  or-   rate  to   be  re- 
der  prescribing  the  just  and  reasonable  proportion  of 
such  joint  rate  to  be  received  by  each  carrier  party 
thereto,  which  order  shall  take  effect  as  a  part  of  the 
original  order. 

"Whenever  there  shall  be  filed  with  the  Commission 
any  schedule  stating  a  new  individual  or  joint  rate, 
fare,  or  charge,  or  any  new  individual  or  joint  classi- 
fication, or  any  new  individual  or  joint  regulation  or 
practice  affecting  any  rate,  fare,  or  charge,  the  Com- 
mission shall  have,  and  it  is  hereby  given,  authority, 
either  upon  complaint  or  upon  its  own  initiative  with- 
out complaint,  ■  at  once,  and  if  it  so  orders,  without 
answer  or  other  formal  pleading  by  the  interested  car- 
rier or  carriers,  but  upon  reasonable  notice,  to  enter 


ceived    by 
carrier. 


each 


Investigation 
of  new  sched- 
ules. 


506  APPENDIX. 

upon  a  hearing  concerning  the  propriety  of  such  rate, 

fare,  charge,  classification,  regulation,  or  practice ;  and 

pending  such  hearing  and  the  decision  thereon  the 

Commission  Conuuission  UDOU  filing  with  such  schedule  and  de- 
may       suspend  ^  '-'  .  re  -i      i  i 

new  schedules,  livcring  to  the  carrier  or  carriers  an^ected  thereby  a 
statement  in  writing  of  its  reasons  for  such  suspen- 
sion may  suspend  the  operation  of  such  schedule  and 
defer  the  use  of  such  rate,  fare,  charge,  classification, 
regulation,  or  practice,  but  not  for  a  longer  period 
than  one  hundred  and  twenty  days  beyond  the  time 
when  such  rate,  fare,  charge,  classification,  regula- 
tion, or  practice  would  otherwise  go  into  effect;  and 
after  full  hearing,  whether  completed  before  or  after 
the  rate,  fare,  charge,  classification,  regulation,  or 
practice  goes  into  effect,  the  Commission  may  make 
such  order  in  reference  to  such  rate,  fare,  charge, 
classification,  regulation,  or  practice  as  would  be 
proper  in  a  proceeding  initiated  after  the  rate,  fare, 
charge,  classification,  regulation,  or  practice  had  be- 
c  o  m  m  ission  comc  effective :  Provided,  That  if  any  such  hearing 

may      extend  '  -nc  • 

suspension.  can  uot  be  concluded  within  the  period  of  suspension, 

as  above  stated,  the  Interstate  Commerce  Commission 

may,  in  its  discretion,  extend  the  time  of  suspension 

for  a  further  period  not  exceeding  six  months.     At 

Burden      o  f  ajjy  hearing  involving  a  rate  increased  after  January 

proof     on     car-         j  o  o  ./ 

rier  as  to  rea-  first,  nineteen  hundred  and  ten,  or  of  a  rate  sought  to 
increased  rates,  be  increased  after  the  passage  of  this  Act,  the  burden 
of  proof  to  show  that  the  increased  rate  or  proposed 
increased  rate  is  just  and  reasonable  shall  be  upon  the 
common  carrier,  and  the  Commission  shall  give  to 
the  hearing  and  decision  of  such  questions  preference 
over  all  other  questions  pending  before  it  and  decide 
the  same  as  speedily  as  possible. 
Commission       ^he  Commissioii  may  also,  after  hearing,  on  a  com- 

may        establish  j  ;>  o? 

through  routes  plaint  or  upou  its  own  initiative  without  complaint, 
and'  ciassifica-  establish  through  routes  and  joint  classifications,  and 
may  establish  joint  rates  as  the  maximum  to  be 
charged  and  may  prescribe  the  division  of  such  rates 
as  hereinbefore  provided  and  the  terms  and  conditions 
under  which  such  through  routes  shall  be  operated, 
whenever  the  carriers  themselves  shall  have  refused 
or  neglected  to  establish  voluntarily  such  through 
routes  or  joint  classifications  or  joint  rates;  and  this 
provision  shall  apply  when  one  of  the  connecting  car- 


tions. 


APPENDIX. 


507 


riers  is  a  water  line.  The  Commission  shall  not,  how- 
ever, establish  any  through  route,  classification,  or  rate 
between  street  electric  passenger  railways  not  en- 
gaged in  the  general  business  of  transporting  freight 
in  addition  to  their  passenger  and  express  business 
and  railroads  of  a  different  character,  nor  shall  the 
Commission  have  the  right  to  establish  any  route, 
classification,  rate,  fare,  or  charge  when  the  trans- 
portation is  wholly  by  water,  and  any  transportation 
by  water  affected  by  this  Act  shall  be  subject  to  the 
laws  and  regulations  applicable  to  transportation  by 
water. 

And  in  establishing  such  through  route,  the  Com- 
mission shall  not  require  any  company,  without  its 
consent,  to  embrace  in  such  route  substantially  less 
than  the  entire  length  of  its  railroad  and  of  any  in- 
termediate railroad  operated  in  conjunction  and  un- 
der a  common  management  or  control  therewith  which 
lies  between  the  termini  of  such  proposed  through 
route,  unless  to  do  so  would  make  such  through  route 
unreasonably  long  as  compared  with  another  prac- 
ticable through  route  which  could  otherwise  be  es- 
tablished. 

In  all  cases  where  at  the  time  of  delivery  of  prop- 
erty to  any  railroad  corporation  being  a  common  car- 
rier, for  transportation  subject  to  the  provisions  of 
this  Act  to  any  point  of  destination,  between  which 
and  the  point  of  such  delivery  for  shipment  two  or 
more  through  routes  and  through  rates  shall  have 
been  established  as  in  this  Act  provided  to  which 
through  routes  and  through  rates  such  carrier  is  a 
party,  the  person,  firm,  or  corporation  making  such 
shipment,  subject  to  such  reasonable  exceptions  and 
regulations  as  the  Interstate  Commerce  Commission 
shall  from  time  to  time  prescribe,  shall  have  the  right 
to  designate  in  writing  by  which  of  such  through 
routes  such  property  shall  be  transported  to  destina- 
tion, and  it  shall  thereupon  be  the  duty  of  the  initial 
carrier  to  route  said  property  and  issue  a  through  bill 
of  lading  therefor  as  so  directed,  and  to  transport 
said  property  over  its  own  line  or  lines  and  deliver  the 
same  to  a  connecting  line  or  lines  according  to  such 
through  route,  and  it  shall  be  the  duty  of  each  of  said 
connecting  carriers  to  receive  said  property  and  trans- 


L  i  m  i  tation 
on  power  to 
prescribe 
through  routes. 


Shippers  may 
designate  rout- 
ing. 


508 


APPENDIX. 


port  it  over  the  said  line  or  lines  and  deliver  the  same 
to  the  next  succeeding  carrier  or  consignee  according 
to  the  routing  instructions  in  said  bill  of  lading: 
Provided,  however.  That  the  shipper  shall  in  all  in- 
stances have  the  right  to  determine,  where  competing 
lines  of  railroad  constitute  portions  of  a  through  line 
or  route,  over  which  of  said  competing  lines  so  con- 
stituting a  portion  of  said  through  line  or  route  his 
freight  shall  be  transported. 

Unlawful     to       n  gjiall  be  unlawful  for  any  common  carrier  sub- 
give    or    receive  .    .  c  ,i  •      i     j  ai  i- 

i  n  f  o  rm  a  tion  ject  to  the  provisious  ot  this  Act,  or  any  omcer,  agent, 
ments!''  *"*  ^^'^  OT  employee  of  such  common  carrier,  or  for  any  other 
person  or  corporation  lawfully  authorized  by  such 
common  carrier  to  receive  information  therefrom, 
linowingly  to  disclose  to  or  permit  to  be  acquired  by 
any  person  or  corporation  other  than  the  shipper  or 
consignee,  without  the  consent  of  such  shipper  or 
consignee,  any  information  concerning  the  nature, 
kind,  quantity,  destination,  consignee,  or  routing  of 
any  property  tendered  or  delivered  to  such  common 
carrier  for  interstate  transportation,  which  informa- 
tion may  be  used  to  the  detriment  or  prejudice  of 
such  shipper  or  consignee,  or  which  may  improperly 
disclose  his  business  transactions  to  a  competitor;  and 
it  shall  also  be  unlawful  for  any  person  or  corporation 
to  solicit  or  knowingly  receive  any  such  information 
Exceptions.  which  may  be  so  used :  Provided,  That  nothing  in  this 
Act  shall  be  construed  to  prevent  the  giving  of  such 
information  in  response  to  any  legal  process  issued 
under  the  authority  of  any  state  or  federal  court,  or 
to  any  officer  or  agent  of  the  Government  of  the 
United  States,  or  of  any  State  or  Territory,  in  the 
exercise  of  his  powers,  or  to  any  officer  or  other 
duly  authorized  person  seeking  such  information 
for  the  prosecution  of  persons  charged  with  or  sus- 
pected of  crime;  or  information  given  by  a  com- 
mon carrier  to  another  carrier  or  its  duly  author- 
ized agent,  for  the  purpose  of  adjusting  mutual  traf- 
fic accounts  in  the  ordinary  course  of  business  of 
such  carriers. 
Penalty.  Any  person,  corporation,  or  association  violating 

any  of  the  provisions  of  the  next  preceding  paragraph 
of  this  section  shall  be  deemed  guilty  of  a  misde- 
meanor, and  for  each  offense,  on  conviction,  shall  pay 


APPENDIX. 


509 


to  the  United  States  a  penalty  of  not  more  than  one 
thousand  dollars. 

If  the  owner  of  property  transported  under  this 
Act  directly  or  indirectly  renders  any  service  con- 
nected with  such  transportation,  or  furnishes  any  in- 
strumentality used  therein,  the  charge  and  allowance 
therefor  shall  be  no  more  than  is  just  and  reasonable, 
and  the  Commission  may,  after  hearing  on  a  com- 
plaint or  on  its  own  initiative,  determine  what  is  a 
reasonable  charge  as  the  maximum  to  be  paid  by  the 
carrier  or  carriers  for  the  services  so  rendered  or  for 
the  use  of  the  instrumentality  so  furnished,  and  fix 
the  same  by  appropriate  order,  which  order  shall  have 
the  same  force  and  effect  and  be  enforced  in  like  man- 
ner as  the  orders  above  pro\dded  for  under  this  sec- 
tion. 

The  foregoing  enumeration  of  powers  shall  not  ex- 
clude any  power  which  the  Commission  would  other- 
wise have  in  the  making  of  an  order  under  the  pro- 
visions of  this  Act. 

Sec.  16.  (Amended  March  2,  1S89,  June  29, 
1906,  and  June  IS,  1910.)  That  if,  after  hearing  on 
a  complaint  made  as  provided  in  section  thirteen  of 
this  Act,  the  Commission  shall  determine  that  any 
party  complainant  is  entitled  to  an  award  of  damages 
under  the  provisions  of  this  Act  for  a  violation 
thereof,  the  Commission  shall  make  an  order  direct- 
ing the  carrier  to  pay  to  the  complainant  the  sum  to 
which  he  is  entitled  on  or  before  a  day  named. 

If  a  carrier  does  not  comply  with  an  order  for  the 
pa3^ment  of  money  within  the  time  limit  in  such  or- 
der, the  complainant,  or  any  persons  for  whose  bene- 
fit such  order  was  made,  may  file  in  the  circuit  court 
of  the  United  States  for  the  district  in  wdiich  he  re- 
sides or  in  which  is  located  the  principal  operating 
office  of  the  carrier,  or  through  which  the  road  of  the 
carrier  runs,  or  in  any  state  court  of  general  juris- 
diction having  jurisdiction  of  the  parties,  a  petition 
setting  forth  briefly  the  causes  for  which  he  claims 
damages,  and  the  order  of  the  Commission  in  the 
premises.  Such  suit  in  the  circuit  court  of  the 
United  States  shall  proceed  in  all  respects  like  other 
civil  suits  for  damages,  except  that  on  the  trial  of 
such  suit  the  findings  and  order  of  the  Commission 


C  o  m  m  ission 
may  determine 
reasonable  maxi- 
mum to  be  paid 
for  service  ren- 
dered or  instru- 
mentality fur- 
nished by  owner 
of  property 
transported. 


Enumerati  o  n 
of  powers  in 
this  section  not 
exclusive. 


Award  of 
damages  by 
Commission. 


To  be  en- 
forced by 
courts. 


Findings  of 
fact  of  Commis- 
sion prima  facie 
evidence  in  rep- 
aration   cases. 


610  APPENDIX, 

shall  be  prima  facie  evidence  of  the  facts  therein 
stated,  and  except  that  the  petitioner  shall  not  be 
liable  for  costs  in  the  circuit  court  nor  for  costs  at 
any  subsequent  stage  of  the  proceedings  unless  they 
accrue  upon  his  appeal.  If  the  petitioner  shall  finally 
p  e  titioner's  prevail  he  shall  be  allowed  a  reasonable  attorney's  fee, 

attorney  s    fees.    '^  i^     i  j?   1 1 

to  be  taxed  and  collected  as  a  part  of  the  costs  ot  the 
suit.  All  complaints  for  the  recovery  of  damages 
shall  be  filed  with  the  Commission  within  two  years 
from  the  time  the  cause  of  action  accrues,  and  not 
L  i  mi tation  after,  and  a  petition  for  the  enforcement  of  an  order 

upon   action.  '  ^  i  i     n    •        i  •         • 

for  the  payment  of  money  shall  be  filed  m  the  circuit 
court  or  state  court  within  one  year  from  the  date  of 
the  order,  and  not  after. 
Joint     plain-       j^  ^hqIi  suits  all  parties  in  whose  favor  the  Commis- 

tiffs      may      sue  '- 

joint      defend-    sion  may  liave  made  an  award  for  damages  by  a  sin- 
on    awards    of  gle  Order  may  be  joined  as  plaintiffs,  and  all  the  car- 
amages.  ^^^^^    parties    to    such    order    awarding    such    dam- 

ages may  be  joined  as  defendants,  and  such  suit 
may  be  maintained  by  such  joint  plaintiffs  and 
against  such  joint  defendants  in  any  district  where 
any  one  of  such  joint  plaintiffs  could  maintain  such 
suit  against  any  one  of  such  joint  defendants;  and 
Service      o  f  gervice  of  process  against  any  one  of  such  defendants 

process.  J^  °  -^  . 

as  may  not  be  found  in  the  district  where  the  suit  is 
brought  may  be  made  in  any  district  where  such  de- 
fendant carrier  has  its  principal  operating  office.  In 
case  of  such  joint  suit  the  recovery,  if  any,  may  be 
by  judgment  in  favor  of  any  one  of  such  plaintiffs, 
against  the  defendant  found  to  be  liable  to  such  plain- 
tiff, 
der  ^of'^Comm^s-  Every  order  of  the  Commission  shall  be  forthwith 
sion.  served  upon  the  designated  agent  of  the  carrier  in  the 

city  of  Washington  or  in  such  other  manner  as  may 
be  provided  by  law. 
Commission       ^]^q  Commission  shall  be  authorized  to  suspend  or 

may       suspend  ^ 

or    modify    or-  modify  its  ordcrs  upon  such  notice  and  in  such  man- 
ner as  it  shall  deem  proper, 
t  h^  ^ " 'a"  ents       ^^  shall  be  the  duty  of  every  common  carrier,  its 
and   employees,  acfcnts  and  employccs,  to  observe  and  comply  witli 

must      comply       '^  i  ,  i  in  •        •  r 

with    such    or-  such  ordcrs  SO  long  as  the  same  shall  remain  m  ef- 

ders.  p      , 

feet. 

Any  carrier,  any  officer,  representative,  or  agent  of 
a  carrier,  or  any  receiver,  trustee,  lessee,  or  agent  of 


APPENDIX. 


511 


either  of  them,  who  knowingly  fails  or  neglects  to 
obey  any  order  made  under  the  provisions  of  section 
fifteen  of  this  Act  shall  forfeit  to  the  United  States 
the  sum  of  five  thousand  dollars  for  each  offense. 
Every  distinct  violation  shall  be  a  separate  offense, 
and  in  case  of  a  continuing  violation  each  day  shall 
be  deemed  a  separate  offense. 

The  forfeiture  provided  for  in  this  Act  shall  be 
payable  into  the  Treasury  of  the  United  States,  and 
shall  be  recoverable  in  a  civil  suit  in  the  name  of  the 
United  States,  brought  in  the  district  where  the  car- 
rier has  its  principal  operating  office,  or  in  any 
district  through  which  the  road  of  the  carrier 
runs. 

It  shall  be  the  duty  of  the  various  district  attor- 
neys, under  the  direction  of  the  Attorney  General  of 
the  United  States,  to  prosecute  for  the  recovery  of 
forfeitures.  The  costs  and  expenses  of  such  prosecu- 
tion shall  be  paid  out  of  the  appropriation  for  the  ex- 
penses of  the  courts  of  the  United  States. 

The  Commission  may  employ  such  attorneys  as  it 
finds  necessary  for  proper  legal  aid  and  service  of  the 
Commission  or  its  members  in  the  conduct  of  their 
work  or  for  proper  representation  of  the  public  in- 
terests in  investigations  made  by  it  or  cases  or  pro- 
ceedings pending  before  it,  whether  at  the  Commis- 
sion's own  instance  or  upon  complaint,  or  to  appear 
for  and  represent  the  Commission  in  any  case  pend- 
ing in  the  Commerce  Court;  and  the  expenses  of 
such  employment  shall  be  paid  out  of  the  appropria- 
tion for  the  Commission. 

If  any  carrier  fails  or  neglects  to  obey  any  order 
of  the  Commission  other  than  for  the  payment  of 
money,  while  the  same  is  in  effect,  the  Interstate  Com- 
merce Commission  or  any  party  injured  thereby,  or 
the  United  States,  by  its  Attorney  General,  may  ap- 
ply to  the  Commerce  Court  for  the  enforcement  of 
such  order.  If,  after  hearing,  that  Court  determines 
that  the  order  was  regularly  made  and  duly  served, 
and  that  the  carrier  is  in  disobedience  of  the  same, 
the  Court  shall  enforce  obedience  to  such  order  by  a 
writ  of  injunction  or  other  proper  process,  mandatory 
or  otherwise,  to  restrain  such  carrier,  its  officers, 
agents,  or  representatives,  from  further  disobedience 


Punishm  e  n  t 
b  y  forfeiture 
for  refusal  to 
obey  order  of 
Comm  i  s  s  i  o  n 
under  section 
15. 


F  o  r  f  e  iture 
payable  into 
Treasury  and 
recoverable  in 
civil  suit. 


Duty  of  dis- 
trict attorneys 
to   prosecute. 


Costs  and 
expenses  to  be 
paid  out  of  ap- 
propriation for 
court    expenses. 

Comm  ission 
may  employ  at- 
torneys. 


Comm  erce 
Court  to  en- 
force orders 
other  than  for 
payment  of 
money. 


513  APPENDIX. 

of  such  order,  or  to  enjoin  upon  it  or  them  obedience 
to  the  same, 
s  c  h  e  duies        Tj^g  copies  of  schedules  and  classifications  and  tar- 
annuai    reports  iffs  of  rates,  farcs,  and  charges,  and  of  all  contracts, 

filedwith  ^'        ^      '  xi< 

c  o  m mission  agreements,  and  arrangements  between  common  car- 
ords,^rece*ivabfe  riers  filed  with  the  Commission  as  herein  provided, 
evidenc'?!'  ^Cer^  and  the  statistics,  tables,  and  figures  contained  in  the 
tifled  copies  or  annual  or  other  reports  of  carriers  made  to  the  Com- 
from  also  prima  jnissiou  as  required  under  the  provisions  of  this  Act 

IRCic      GV1Q.GI1CG, 

shall  be  preserved  as  public  records  in  the  custody  of 
the  secretary  of  the  Commission,  and  shall  be  received 
as  prima  facie  evidence  of  what  they  purport  to  be 
for  the  purpose  of  investigations  by  the  Commission 
and  in  all  judicial  proceedings;  and  copies  of  and 
extracts  from  any  of  said  schedules,  classifications, 
tariffs,  contracts,  agreements,  arrangements,  or  re- 
ports, made  public  record  as  aforesaid,  certified  by 
the  secretar}^,  under  the  Commission's  seal,  shall  be 
received  in  evidence  with  like  effect  as  the  originals. 
Commission       §^0.  16a.     (Added  June  29,  1906.)     That  after 

may     grant     re-  .    .  J^  .  ,    -,  i  n       i 

hearings.  a  decisiou.  Order,  or  requirement  has  been  made  by 

the  Commission  in  any  proceeding  any  party  thereto 
may  at  any  time  make  application  for  rehearing  of  the 
same,  or  axiy  matter  determined  therein,  and  it  shall 
be  lawful  for  the  Commission  in  its  discretion  to 
grant  such  a  rehearing  if  sufficient  reason  therefor 
A  p  plication  ]-,g  i^iade  to  appear.     Applications  for  rehearing  shall 

tor      rehearing  J^  ^  ^  ^  ".      . 

shall  not  oper-  be  govcmed  by  such  general  rules  as  the  Commission 
p  r  o  c  e  edings,  may  establish.     No  such  application  shall  excuse  any 

unless      so      or-  '  .         „  ,    .  .,,  ■,        .  i      •    •    „ 

dered  by  Com-  camcr  Irom  Complying  With  or  obeying  any  decision, 
mission.  order,  or  requirement  of  the  Commission,  or  operate 

in  any  manner  to  stay  or  postpone  the  enforcement 
thereof,  without  the  special  order  of  the  Commission. 
In  case  a  rehearing  is  granted  the  proceedings  there- 
upon shall  conform  as  nearly  as  may  be  to  the  pro- 
ceedings in  an  original  hearing,  except  as  the  Com- 
mission may  otherwise  direct ;  and  if,  in  its  judgment, 
after  such  rehearing  and  the  consideration  of  all  facts, 
including  those  arising  since  the  former  hearing,  it 
shall  appear  that  the  original  decision,  order,  or  re- 
quirement is  in  any  respect  unjust  or  unwarranted. 
Com  mission  ^jjg  Commissiou  may  reverse,  change,  or  modifv  the 

inay,   on  rehear-  -^  '  ~    '  •'    _ 

1  n  g ,     reverse,  same  accordingly.     Any  decision,  order,  or  require- 

change,  or  mod-  i         p.  i  i  •  •  i  • 

ify  order.  mcut  made  alter  such  rehearing,  reversing,  changing, 


APPENDIX. 


51J 


Commiss  i  o  n 
may  determine 
its  own  pro- 
cedure. 


Parties  may- 
appear  in  per- 
son or  by  at- 
torney. 


OflScial    seal. 


or  modifying  the  original  determination  shall  be  sub- 
ject to  the  same  provisions  as  an  original  order. 

Sec.  17.  {As  amended  March  2,  1889.)  That 
the  Commission  may  conduct  its  proceedings  in  such 
manner  as  will  best  conduce  to  the  proper  dispatch  of 
business  and.  to  the  ends  of  justice.  A  majority  of 
the  Commission  shall  constitute  a  quorum  for  the 
transaction  of  business,  but  no  Commissioner  shall 
participate  in  any  hearing  or  proceeding  in  which  he 
has  any  pecuniary  interest.  Said  Commission  may, 
from  time  to  time,  make  or  amend  such  general  rules 
or  orders  as  may  be  requisite  for  the  order  and  regu- 
lation of  proceedings  before  it,  including  forms  of 
notices  and  the  service  thereof,  which  shall  conform, 
as  nearly  as  may  be,  to  those  in  use  in  the  courts  of 
the  United  States.  Any  party  may  appear  before  said 
Commission  and  be  heard,  in  person  or  by  attorney. 
Every  vote  and  official  act  of  the  Commission  shall 
be  entered  of  record,  and  its  proceedings  shall  be 
public  upon  the  request  of  either  party  interested. 
Said  Commission  shall  have  an  official  seal,  which 
shall  be  judicially  noticed.  Either  of  the  members 
of  the  Commission  may  administer  oaths  and  affirma- 
tions and  sign  subpoenas. 

Sec.  18.  {As  amended  March  2,  1889.)  \_8ee 
section  24,  increasing  salaries  of  Commissioners.'] 
That  each  Commissioner  shall  receive  an  annual  sal- 
ary of  seven  thousand  five  hundred  dollars,  payable 
in  the  same  manner  as  the  judges  of  the  courts  of  the 
United  States.  The  Commission  shall  appoint  a  sec- 
retary, who  shall  receive  an  annual  salary  of  three 
thousand  five  hundred  dollars,^  payable  in  like  man- 
ner. The  Commission  shall  have  authority  to  em- 
ploy and  fix  the  compensation  of  such  other  employees 
as  it  may  find  necessary  to  the  proper  performance 
of  its  duties.  Until  otherwise  provided  by  law,  the 
Commission  may  hire  suitable  offices  for  its  use,  and 
shall  have  authority  to  procure  all  necessary  office 
supplies.  Witnesses  summoned  before  the  Commis- 
sion shall  be  paid  the  same  fees  and  mileage  that  are  fees? 
paid  witnesses  in  the  courts  of  the  United  States. 

All  of  the  expenses  of  the  Commission,  including 
all  necessary  expenses  for  transportation  incurred  by 

1  Increased  to  $5,000  by  sundry  civil  act  of  March  4,  1907,  34  Stat.  L.,  1311 


W  i  t  n  esses' 


514  APPENDIX. 

the  Commissioners,  or  by  their  employees  under  their 
orders,  in  making  any  investigation,  or  upon  official 
business  in  any  other  places  than  in  the  city  of  Wash- 
ington, shall  be  allowed  and  paid  on  the  presentation 
of  itemized  vouchers  therefor  approved  by  the  chair- 
man of  the  Commission. 
Principal  of-       g^c.  19.     That  the  principal  office  of  the  Commis- 

fice     at     Wash-  i  i  • 

ington.  sion  shall  be  in  the  city  of  Washington,  where  its  gen- 

Sessions     o  f  gp^l  scssious  shall  be  held ;  but  whenever  the  conven- 

t  h  e       Commis-  ^ 

sion.  ience  of  the  public  or  the  parties  may  be  promoted, 

or  delay  or  expense  prevented  thereby,  the  Commis- 
sion may  hold   special  sessions  in   any  part  of   the 
United  States.     It  may,  by  one  or  more  of  the  Com- 
Commission  missiouers,   prosecute   any   inquiry   necessary   to   its 

may      prosecute  •'    -i  n     ot  • 

inquiries  by  one  duties,  in  any  part  of  the  United  States,  into  any 

members  in  any  matter  or  question  of  fact  pertaining  to  the  business 

un?ted°  states.**  of  any  common  carrier  subject  to  the  provisions  of 

this  Act. 

Amendment       gj^Q    jg^^     That  the  Commission  shall,  as  herein- 

o  f      March      1,  •  t  ,     ,  i 

1913.  after  provided,  investigate,  ascertain,  and  report  the 

value  of  all  the  property  owned  or  used  by  every 

common  carrier  subject  to  the  provisions  of  this  Act. 

Investigation  ^o  enable  the  Commission  to  make  such  investiga- 

by    Commission.  i        •       i  i 

Experts.  tion  and  report,  it  is  authorized  to  employ  such  ex- 

perts and  other  assistants  as  may  be  necessary.  The 
Commission  may  appoint  examiners  who  shall  have 
power  to  administer  oaths,  examine  witnesses,  and 

Classification  ^^ke  testimony.     The  Commission  shall  make  an  in- 

and   inventory.  i     n    i 

ventory  which  shall  list  the  property  of  every  com- 
mon carrier  subject  to  the  provisions  of  this  Act  in 
detail,  and  show  the  value  thereof  as  hereinafter 
provided,  and  shall  classify  the  physical  property,  as 
nearly  as  practicable,  in  conformity  with  the  clas- 
sification of  expenditures  for  road  and  equipment, 
as  prescribed  by  the  Interstate  Commerce  Commis- 
sion. 
Cost  of  prop-       First.     In    such    investigation    said    Commission 

erty     used     for  n        -i  i  i        • 

common   -   car-  shall  ascertain  and  report  in  detail  as  to  each  piece 

tier  purposes.  „  ,  n  i    i  •  i 

of  property  owned  or  used  by  said  common  carrier 
for  its  purposes  as  a  common  carrier,  the  original  cost 
to  date,  the  cost  of  reproduction  new,  the  cost  of  re- 
production less  depreciation,  and  an  analysis  of  the 
methods  by  which  these  several  costs  are  obtained, 
and  the  reason  for  their  differences,  if  any.     The 


APPENDIX. 


515 


Commission  shall  in  like  manner  ascertain  and  re- 
port separately  other  values,  and  elements  of  value, 
if  any,  of  the  property  of  such  common  carrier,  and 
an  analysis  of  the  methods  of  valuation  employed, 
and  of  the  reasons  for  any  differences  between  any 
such  value,  and  each  of  the  foregoing  cost  values. 

Second.  Such  investigation  and  report  shall  state 
in  detail  and  separately  from  improvements  the  orig- 
inal cost  of  all  lands,  rights  of  way,  and  terminals 
owned  or  used  for  the  purposes  of  a  common  carrier, 
and  ascertained  as  of  the  time  of  dedication  to  pub- 
lic use,  and  the  present  value  of  the  same,  and  sepa- 
rately the  original  and  present  cost  of  condemnation 
and  damages  or  of  purchase  in  excess  of  such  original 
cost  or  present  value. 

Third.  Such  investigation  and  report  shall  show 
separately  the  property  held  for  purposes  other  than 
those  of  a  common  carrier,  and  the  original  cost  and 
present  value  of  the  same,  together  with  an  analysis 
of  the  methods  of  valuation  employed. 

Fourth.  In  ascertaining  the  original  cost  to  date 
of  the  property  of  such  common  carrier  the  Commis- 
sion, in  addition  to  such  other  elements  as  it  may 
deem  necessary,  shall  investigate  and  report  upon 
the  history  and  organization  of  the  present  and  of 
any  previous  corporation  operating  such  property; 
upon  any  increases  or  decreases  of  stocks,  bonds,  or 
other  securities,  in  any  reorganization;  upon  moneys 
received  by  any  such  corporation  by  reason  of  any 
issues  of  stocks,  bonds,  or  other  securities;  upon  the 
syndicating,  banking,  and  other  financial  arrange- 
ments under  which  such  issues  were  made  and  the 
expense  thereof;  and  upon  the  net  and  gross  earn- 
ings of  such  corporations;  and  shall  also  ascertain 
and  report  in  such  detail  as  may  be  determined  by 
the  Commission  upon  the  expenditure  of  all  moneys 
and  the  purposes  for  which  the  same  were  expended. 

Fifth.  The  Commission  shall  ascertain  and  re- 
port the  amount  and  value  of  any  aid,  gift,  grant  of 
right  of  way,  or  donation,  made  to  any  such  common 
carrier,  or  to  any  previous  corporation  operating  such 
property,  by  the  Government  of  the  United  States 
or  by  any  State,  county,  or  municipal  government,  or 
by  individuals,  associations,  or  corporations;  and  it 


other       prop- 
erty. 


Value  of  real 
property. 


Property  held 
for  other  than 
commoa  -  car- 
rier purposes. 


Corporate    or- 
ganization. 


Stocks 
bonds. 


and 


Earnings    and 
expenditures. 


Grants     from 
United    States. 


516  APPENDIX. 

Value  of  land  ghall  also  ascertain  and  report  the  grants  of  land  to 

grants. 

any  such  common  carrier,  or  any  previous  corpora- 
tion operating  such  property,  by  the  Government  of 
the  United  States,  or  by  any  State,  county,  or  munici- 
pal government,  and  the  amount  of  money  derived 
from  the  sale  of  any  portion  of  such  grants  and  the 
value  of  the  unsold  portion  thereof  at  the  time  ac- 
quired and  at  the  present  time,  also,  the  amount  and 

Concessi  o  n  s  yalue  of  any  concession  and  allowance  made  by  such 
Tier,  common  carrier  to  the   Government  of   the   United 

States,  or  to  any  State,  county,  or  municipal  gov- 
ernment in  consideration  of  such  aid,  gift,  grant, 
or  donation. 

Method  of  Except  as  herein  otherwise  provided,  the  Com- 
mission shall  have  power  to  prescribe  the  method 
of  procedure  to  be  followed  in  the  conduct  of  the 
investigation,  the  form  in  which  the  results  of  the 
valuation  shall  be  submitted,  and  the  classification 
of  the  elements  that  constitute  the  ascertained  value, 
and  such  investigation  shall  show  the  value  of  the 
property  of  every  common  carrier  as  a  whole  and 
separately  the  value  of  its  property  in  each  of  the 
several  States  and  Territories  and  the  District  of 
Columbia,  classified  and  in  detail  as  herein  required. 

Prosecution       Such    investigation    shall    be    commenced    within 

and     report     of  „,  i/.ji-*j^  nnii 

investigation.  sixty  days  after  the  approval  of  this  Act  and  snail 
be  prosecuted  with  diligence  and  thoroughness,  and 
the  result  thereof  reported  to  Congress  at  the  be- 
ginning of  each  regular  session  thereafter  until  com- 
pleted. 
Documents  to       Every  common  carrier  subject   to  the  provisions 

aid        investiga-  ■'  n  ■,  ■>        /-^  ■      ■ 

tion.  of  this  Act  shall  furnish  to  the  Commission  or  its 

agents  from  time  to  time  and  as  the  Commission 
may  require  maps,  profiles,  contracts,  reports  of  en- 
gineers, and  any  other  documents,  records,  and 
papers,  or  copies  of  any  or  all  of  the  same,  in  aid  of 
such  investigation  and  determination  of  the  value  of 
the  property  of  said  common  carrier,  and  shall  grant 
Access    of  ^Q  q\\  agents  of  the  Commission  free  access  to  its 

agents   to   prop-  '^  •  j 

erty.  right  of  way,  its  property,  and  its  accounts,  records, 

and  memoranda  whenever  and  wherever  requested  by 
any  such  duly  authorized  agent,  and  every  common 
carrier  is  hereby  directed  and  required  to  co-operate 
with  and  aid  the  Commission  in  the  work  of  the  val- 


APPENDIX. 


517 


uation  of  its  property  in  such  further  particulars 
and  to  such  extent  as  the  Commission  may  require 
and  direct,  and  all  rules  and  regulations  made  by  the 
Commission  for  the  purpose  of  administering  the 
provisions  of  this  section  and  section  twenty  of  this 
Act  shall  have  the  full  force  and  effect  of  law.  Un- 
less otherwise  ordered  by  the  Commission,  with  the 
reasons  therefor,  the  records  and  data  of  the  Com- 
mission shall  be  open  to  the  inspection  and  examina- 
tion of  the  public. 

Upon  the  completion  of  the  valuation  herein  pro- 
vided for  the  Commission  shall  thereafter  in  like 
manner  keep  itself  informed  of  all  extensions  and 
improvements  or  other  changes  in  the  condition  and 
value  of  the  property  of  all  common  carriers,  and 
shall  ascertain  the  value  thereof,  and  shall  from  time 
to  time,  revise  and  correct  its  valuations,  showing 
such  revision  and  correction  classified  and  as  a  whole 
and  separately  in  each  of  the  several  States  and  Ter- 
ritories and  the  District  of  Columbia,  which  valua- 
tions, both  original  and  corrected,  shall  be  tentative 
valuations  and  shall  be  reported  to  Congress  at  the 
beginning  of  each  regular  session. 

To  enable  the  Commission  to  make  such  changes 
and  corrections  in  its  valuations  of  each  chiss  of 
property,  every  common  carrier  subject  to  the  pro- 
visions of  this  Act  shall  make  such  reports  and  fur- 
nish such  information  as  the  Commission  may  re- 
quire. 

Whenever  the  Commission  shall  have  completed 
the  tentative  valuation  of  the  property  of  any  com- 
mon carrier,  as  herein  directed,  and  before  such  val- 
uation shall  become  final,  the  Commission  shall  give 
notice  by  registered  letter  to  the  said  carrier,  the 
Attorney  General  of  the  United  States,  the  governor 
of  any  State  in  which  the  property  so  valued  is  lo- 
cated, and  to  such  additional  parties  as  the  Com- 
mission may  prescribe,  stating  the  valuation  placed 
upon  the  several  classes  of  property  of  said  carrier, 
and  shall  allow  thirty  days  in  which  to  file  a  protest 
of  the  same. with  the  Commission.  If  no  protest  is 
filed  within  thirty  days,  said  valuation  shall  become 
final  as  of  the  date  thereof. 

If  notice  of  protest  is  filed  the  Commission  shall 


Effect     of 
rules. 


Public  inspec- 
tion  of  records. 


Valuation  of 
extensions  and 
improvements. 


Reports 
Congress. 


to 


Informati  o  n 
required  of  car- 
riers. 


Notice  of 
completion  of 
tentative  valua- 
tion. 


Finality  if  no 
protest  filed. 


518 


APPENDIX. 


Hearings 
protests. 


Changes. 


of  fix  a  time  for  hearing  the  same,  and  shall  proceed 
as  promptly  as  may  be  to  hear  and  consider  any  mat- 
ter relative  and  material  thereto  which  may  be  pre- 
sented in  support  of  any  such  protest  so  filed  as 
aforesaid.  If  after  hearing  any  protest  of  such 
tentative  valuation  under  the  provisions  of  this  Act 
the  Commission  shall  be  of  the  opinion  that  its  valua- 
tion should  not  become  final,  it  shall  make  such 
changes  as  may  be  necessary,  and  shall  issue  an  order 
making  such  corrected  tentative  valuation  final  as 
Efifect^of  final  of  the  date  thereof.  All  final  valuations  by  the  Com- 
ciassification.  missiou  and  the  classification  thereof  shall  be  pub- 
lished and  shall  be  prima  facie  evidence  of  the  value 
of  the  property  in  all  proceedings  under  the  Act  to 
regulate  commerce  as  of  the  date  of  the  fixing 
thereof,  and  in  all  judicial  proceedings  for  the  en- 
forcement of  the  Act  approved  February  fourth, 
eighteen  hundred  and  eighty-seven,  commonly  known 
as  "the  Act  to  regulate  commerce,"  and  the  various 
Acts  amendatory  thereof,  and  in  all  judicial  pro- 
ceedings brought  to  enjoin,  set  aside,  annul,  or  sus- 
pend, in  whole  or  in  part,  any  order  of  the  Interstate 
Commerce  Commission. 

If  upon  the  trial  of  any  action  involving  a  final 
value  fixed  by  the  Commission,  evidence  shall  be  in- 
troduced regarding  such  value  which  is  found  by  the 
court  to  be  different  from  that  offered  upon  the  hear- 
ing before  the  Commission,  or  additional  thereto  and 
Transmission  substantially  affecting  said  value,  the  court,  before 

to    Commission.  -^  -,         .     -,  i      i     n    i 

proceeding  to  render  judgment  shall  transmit  a  copy 
of  such  evidence  to  the  Commission,  and  shall  stay 
further  proceedings  in  said  action  for  such  time  as 
the  court  shall  determine  from  the  date  of  such  trans- 
om mission.  Upon  the  receipt  of  such  evidence  the  Com- 
missiop  shall  consider  the  same  and  may  fix  a  final 
value  different  from  the  one  fixed  in  the  first  in- 
stance, and  may  alter,  modify,  amend  or  rescind  any 
order  which  it  has  made  involving  said  final  value, 
and  shall  report  its  action  thereon  to  said  court 
M  o  dification  within  the  time  fixed  by  the  court.     If  the  Commis- 

of  order.  *' 

sion  shall  alter,  modify,  or  amend  its  order,  such  al- 
tered, modified,  or  amended  order  shall  take  the  place 
of  the  original  order  complained  of  and  judgment 
shall  be  rendered  thereon  as  though  made  by  the  Com- 


Effect  of  evi 
dence. 


Action 
Commission. 


APPENDIX.  519 

mission  in  the  first  instance.     If  the  original  order 

shall  not  be  rescinded  or  changed  by  the  Commission,  oriSnaTorder 

judgment  shall  be  rendered  upon  such  original  order. 

The  provisions  of  this  section  shall  apply  to  re-  ^ec^tr^irs'^'"  '° 
ceivers  of  carriers  and  operating  trustees.  In  case 
of  failure  or  refusal  on  the  part  of  any  carrier,  re- 
ceiver, or  trustee  to  comply  with  all  the  requirements 
of  this  section  and  in  the  manner  prescribed  by  the 
Commission  such  carrier,  receiver,  or  trustee  shall  Penalty, 
forfeit  to  the  United  States  the  sum  of  five  hundred 
dollars  for  each  such  offense  and  for  each  and  every 
day  of  the  continuance  of  such  offense,  such  forfeit- 
ures to  be  recoverable  in  the  same  manner  as  other 
forfeitures  provided  for  in  section  sixteen  of  the  Act 
to  regulate  commerce. 

That  the  district  courts  of  the  United  States  shall  of  ^  dll'frl'c^ 
have  jurisdiction,  upon  the  application  of  the  Attor-  ;°y'*e'ompiiaTe". 
ney  General  of  the  United  States  at  the  request  of 
the  Commission,  alleging  a  failure  to  comply  vrith 
or  a  violation  of  any  of  the  provisions  of  this  section 
by  any  common  carrier,  to  issue  a  writ  or  writs  of 
mandamus  commanding  such  common  carrier  to 
comply  with  the  provisions  of  this  section. 

It  shall  be  the  duty  of  every  common  carrier  by  tai  ^ac?  ^Jf^°Au- 
railroad  whose  property  is  being  valued  under  the  s^^*'  ^'  i^^^- 
Act  of  March  first,  nineteen  hundred  and  thirteen, 
to  transport  the  engineers,  field  parties,  and  other 
employees  of  the  United  States  who  are  actually  en- 
gaged in  making  surveys  and  other  examination  of 
the  physical  property  of  said  carrier  necessary  to  exe- 
cute said  Act  from  point  to  point  on  said  railroad  as 
may  be  reasonably  required  by  them  in  the  actual  dis- 
charge of  their  duties ;  and,  also,  to  move  from  point 
to  point  and  store  at  such  points  as  may  be  reason- 
ably required  the  cars  of  the  United  States  which 
are  being  used  to  house  and  maintain  said  employees ; 
and,  also,  to  carry  the  supplies  necessary  to  maintain 
said  employees  and  the  other  property  of  the  United 
States  actually  used  on  said  railroad  in  said  work 
of  valuation.  The  service  above  required  shall  be 
regarded  as  a  special  service  and  shall  be  rendered 
under  such  forms  and  regulations  and  for  such  rea- 
sonable compensation  as  may  be  prescribed  by  the 
Interstate  Commerce  Commission  and  as  will  insure 


520  APPENDIX. 

an  accurate  record  and  account  of  the  service  ren- 
dered by  the  railroad,  and  such  evidence  of  trans- 
portation, bills  of  lading,  and  so  forth,  shall  be  fur- 
nished to  the  Commission  as  may  from  time  to  time 
be  required  by  the  Commission. 
Commission       g^Q^  20.      (As  amended  June  29,  1906,  Februaru 

m.  a  y        require  ^  ^  ^  ^ 

annual  reports  £5^  1909,  Jutie  IS,  1910,  and  MavcJi  Jf,  1915.)  That 
method  of  mak-  the  Commission  is  hereby  authorized  to  require  an- 
ing  same.  nVial  reports  from  all  common  carriers  subject  to  the 

provisions  of  this  Act,  and  from  the  owners  of  all 
railroads  engaged  in  interstate  commerce  as  defined 
in  this  Act,  to  prescribe  the  manner  in  which  such 
reports  shall  be  made,  and  to  require  from  such  car- 
riers specific  answers  to  all  questions  upon  which  the 
What  reports  Commission  may  need  information.     Such  annual  re- 

of  carriers  shall  "^  c  •      i  i 

contain.  poi'ts  shall  sliow  in  detail  the  amount  of  capital  stock 

issued,  the  amounts  paid  therefor,  and  the  manner 
of  payment  for  the  same ;  the  dividends  paid,  the  sur- 
plus fund,  if  any,  and  the  number  of  stockholders; 
the  funded  and  floating  debts  and  the  interest  paid 
thereon;  the  cost  and  value  of  the  carrier's  property, 
franchises,  and  equipments;  the  number  of  em- 
ployees and  the  salaries  paid  each  class ;  the  amounts 
expended  for  improvements  each  year,  hoAV  expended, 
and  the  character  of  such  improvements ;  the  earnings 
and  receipts  from  each  branch  of  business  and  from 
all  sources;  the  operating  and  other  expenses;  the 
balances  of  profit  and  loss ;  and  a  complete  exhibit  of 
the  financial  operations  of  the  carrier  each  year,  in- 
c  0  m  mission  cludiuo-  an  annual  balance  sheet.     Such  reports  shall 

may       prescribe  "  .  .  ^      . 

uniform  system  also  contain  sucli  information  in  relation  to  rates  or 

of  accounts.  ,    ,  .  .  „  <>      ■    i  i_ 

regulations  concerning  lares  or  freights,  or  agree- 
ments, arrangements,  or  contracts  affecting  the  same 
as  the  Commission  may  require ;  and  the  Commission 
may,  in  its  discretion,  for  the  purpose  of  enabling  it 
the  better  to  carry  out  the  purposes  of  this  Act,  pre- 
scribe a  period  of  time  within  which  all  common  car- 
riers subject  to  the  provisions  of  this  Act  shall  have, 
as  near  as  may  be,  a  uniform  system  of  accounts,  and 
the  manner  in  which  such  accounts  shall  be  kept. 
Annual      re-       '^.^[^  detailed  rcpoi'ts  shall  contain  all  the  required 

ports  to  be  filed  ^  . ' 

■with     com-mis-  statistics  for  the  period  of  twelve  months  ending  on 

tember    30    of  the  thirtieth  day  of  June  in  each  year,  or  on  the 

year.  thirty-first  day  of  December  in  each  year  if  the  Com- 


APPENDIX. 


521 


mission  by  order  substitute  that  period  for  the  year 
ending  June  thirtieth,  and  shall  be  made  out  under 
oath  and  filed  with  the  Commission  at  its  office  in 
Washington  within  three  months  after  the  close  of 
the  year  for  which  the  report  is  made,  unless  addi- 
tional time  be  granted  in  any  case  by  the  Commis- 
sion; and  if  any  carrier,  person,  or  corporation  sub- 
ject to  the  provisions  of  this  Act  shall  fail  to  make 
and  file  said  annual  reports  within  the  time  above 
specified,  or  within  the  time  extended  by  the  Commis- 
sion, for  making  and  filing  the  same,  or  shall  fail  to 
make  specific  answer  to  any  question  authorized  by 
the  provisions  of  this  section  within  thirty  days  from 
the  time  it  is  lawfully  required  so  to  do,  such  party 
shall  forfeit  to  the  United  States  the  sum  of  one 
hundred  dollars  for  each  and  every  day  it  shall  con- 
tinue to  be  in  default  with  respect  thereto.  The  Com- 
mission shall  also  have  authority  by  general  or  spe- 
cial orders  to  require  said  carriers,  or  any  of  them, 
to  file  monthly  reports  of  earnings  and  expenses,  and 
to  file  periodical  or  special,  or  both  periodical  and 
special,  reports  concerning  any  matters  about  which 
the  Commission  is  authorized  or  required  by  this  or 
any  other  law  to  inquire  or  to  keep  itself  informed 
or  which  it  is  required  to  enforce ;  and  such  periodical 
or  special  reports  shall  be  under  oath  whenever  the 
Commission  so  requires ;  and  if  any  such  carrier  shall 
fail  to  make  and  file  any  such  periodical  or  special 
report  within  the  time  fixed  by  the  Commission,  it 
shall  be  subject  to  the  forfeitures  last  above  pro- 
vided. 

Said  forfeitures  shall  be  recovered  in  the  manner 
provided  for  the  recovery  of  forfeitures  under  the  pro- 
visions of  this  Act. 

The  oath  required  by  this  section  may  be  taken 
before  any  person  authorized  to  administer  an  oath 
by  the  laws  of  the  State  in  which  the  same  is  taken. 

The  Commission  may,  in  its  discretion,  prescribe 
the  forms  of  any  and  all  accounts,  records,  and 
memoranda  to  be  kept  by  carriers  subject  to  the  pro- 
visions of  this  Act,  including  the  accounts,  records, 
and  memoranda  of  the  movement  of  traffic  as  well  as 
the  receipts  and  expenditures  of  moneys.  The  Com- 
mission shall  at  all  times  have  access  to  all  accounts. 


Com  mission 
may  grant  ad- 
ditional  time. 


Penalty. 


Monthly 
periodical 
ports. 


Recovery 
forfeitures. 


of 


Oath  to  an- 
n  u  a  1  reports, 
how   taken. 


Com  mission 
may  prescribe 
forms  of  ac- 
counts, records, 
and  memo- 

randa, and  have 
access    thereto. 


522  APPENDIX. 

records,  and  memoranda  kept  by  carriers  subject  to 
Carrier      t  o  this  Act,  and  it  shall  be  unlawful  for  such  carriers  to 

keep     no     other  '  t       ,i 

accounts      than  keep  any  other  accounts,  records,  or  memoranda  than 

scribid  by^Com-  thosc  prescribed  or  approved  by  the  Commission,  and 

mission.  ^^  ^^y  employ  special  agents  or  examiners,  who  shall 

Commission  j-^^ve  authority  under  the  order  of  the  Commission  to 

may         employ    .  ,  ,     "^  .  in  ,  a 

special      exam-  mspcct  and  examine  any  and  all  accounts,  records, 
spect     accounts  and  memoranda  kept  by  such  carriers.     This  provision 
and  records.        g\iaii  apply  to  receivers  of  carriers  and  operating  trus- 
tees. 
Punishment       j^  q^so  of  failure  or  refusal  on  the  part  of  any  such 

of      carrier      by  i  i  j. 

forfeiture    for  carrier,  receiver,  or  trustee  to  keep  such  accounts, 

failure    to    keep  -  -,  ,  ji       i        i  i   •      xi 

accounts     or  records,  and  memoranda  on  the  books  and  m  the  man- 
scribed  by  Com-  ucr  prescribed  by  the  Commission,  or  to  submit  such 
f/fow''   in^spel°  accounts,  records,  and  memoranda  as  are  kept  to  the 
tion  thereof.        inspection  of  the  Commission  or  any  of  its  authorized 
agents  or  examiners,  such  carrier,  receiver,  or  trustee 
shall  forfeit  to  the  United  States  the  sum  of  five 
hundred  dollars  for  each  such  offense  and  for  each 
and  every  day  of  the  continuance  of  such  offense, 
such  forfeitures  to  be  recoverable  in  the  same  manner 
as  other  forfeitures  provided  for  in  this  Act. 
Punishment       ^^y  persou  who  shall  MaUfully  make  any  falsc  entry 

of      person      for  -^     ^  ,         p  . 

false    entry    in  in  the  accouuts  of  any  book  of  accounts  or  m  any 

accounts  or  rec-  i      i        i    i  •  i  i     n 

ords,  or  muti-  rccord  or  memoranda  kept  by  a  carrier,  or  who  shall 
counts  or  rec-  wiUfully  dcstroy,  mutilate,  alter,  or  by  any  other 
keeping"''  other  uieaus  Or  dcvice  falsify  the  record  of  any  such  ac- 
accounts     than  cgunt,  rccord,  or  memoranda,  or  who  shall  willfully 

thosepre-  "  '  '  "^ 

scribed.    Pine  ncfflcct  Or  fail  to  make  full,  true  and  correct  entries 

or  imprisonment    .     »  ^  t         j?      ii    j?      . 

or  both.  m  such  accouuts,  records,  or  memoranda  oi  all  tacts 

and  transactions  appertaining  to  the  carrier's  business, 
or  shall  keep  any  other  accounts,  records,  or  memo- 
randa than  those  prescribed  or  approved  by  the  Com- 
mission, shall  be  deemed  guilty  of  a  misdemeanor, 
and  shall  be  subject,  upon  conviction  in  any  court 
of  the  United  States  of  competent  jurisdiction,  to  a 
fine  of  not  less  than  one  thousand  dollars  nor  more 
than  five  thousand  dollars  or  imprisonment  for  a 
term  not  less  than  one  year  nor  more  than  three 
years,  or  both  such  fine  and  imprisonment :  Provided, 
of 'pebruar ™25*  That  the  Commission  may  in  its  discretion  issue  or- 
1909-  ders  specifying  such  operating,  accounting,  or  finan- 

may  "permirde*-  cial  papers,  Tccords,  books,  blanks,  tickets,  stubs,  or 
ords?*'"''  °*  ^^'^'  documents  of  carriers  which  may,  after  a  reasonable 


APPENDIX. 


523 


time,  be  destroyed,  and  prescribing  the  length  of  time 
such  books,  papers,  or  documents  shall  be  preserved. 

Any  examiner  who  divulges  any  fact  or  informa- 
tion which  may  come  to  his  knowledge  during  the 
course  of  such  examination,  except  in  so  far  as  he 
may  be  directed  by  the  Commission  or  by  a  court  or 
Judge  thereof,  shall  be  subject,  upon  conviction  in  any 
court  of  the  United  States  of  competent  jurisdiction, 
to  a  fine  of  not  more  than  five  thousand  dollars  or 
imprisonment  for  a  term  not  exceeding  two  years,  or 
both. 

That  the  circuit  and  district  courts  of  the  United 
States  shall  have  jurisdiction,  upon  the  application 
of  the  Attorney  General  of  the  United  States  at  the 
request  of  the  Commission,  alleging  a  failure  to  com- 
ply with  or  a  violation  of  any  of  the  provisions  of 
said  Act  to  regulate  commerce  or  of  any  Act  supple- 
mentary thereto  or  amendatory  thereof  by  any  com- 
mon carrier,  to  issue  a  writ  or  writs  of  mandamus 
commanding  such  common  carrier  to  comply  with  the 
provisions  of  said  Acts,  or  any  of  them. 

And  to  carry  out  and  give  effect  to  the  provisions 
of  said  Acts,  or  any  of  them,  the  Commission  is  hereby 
authorized  to  employ  special  agents  or  examiners  who 
shall  have  power  to  administer  oaths,  examine  wit- 
nesses, and  receive  evidence. 

That  any  common  carrier,  railroad,  or  transporta- 
tion company  subject  to  the  provisions  of  this  Act 
receiving  property  for  transportation  from  a  point  in 
one  State  or  Territory  or  the  District  of  Columbia  to 
a  point  in  another  State,  Territory,  District  of  Colum- 
bia, or  from  any  point  in  the  United  States  to  a  point 
in  an  adjacent  foreign  country  shall  issue  a  receipt 
or  bill  of  lading  therefor,  and  shall  be  liable  to  the 
lawful  holder  thereof  for  any  loss,  damage,  or  injury 
to  such  property  caused  by  it  or  by  any  common  car- 
rier, railroad  or  transportation  company  to  which  such 
property  may  be  delivered  or  over  whose  line  or  lines 
such  property  may  pass'  within  the  United  States  or 
within  an  adjacent  foreign  country  when  transported 
on  a  through  bill  of  lading,  and  no  contract,  receipt, 
rule,  regulation,  or  other  limitation  of  any  character 
whatsoever,  shall  exempt  such  common  carrier,  rail- 
road, or  transportation  company  from  the  liability 


Pun  ishment 
of  special  ex- 
aminer who  di- 
vulges informa- 
t  i  o  n  without 
authority.  Fine 
or  imprisonment 
or  both. 


United  States 
courts  may  is- 
sue mandamus 
to  compel  com- 
pliance with 
provisions  o  f 
Act. 


Com  mission 
may  employ 
special  exam- 
iners to  receive 
evidence. 


Initial  carrier 
liable  for  loss 
or  damage  on 
through  ship- 
ments. 


524  APPENDIX. 

hereby  imposed;  and  any  such  common  carrier,  rail- 
road, or  transportation  company  so  receiving  prop- 
erty for  transportation  from  a  point  in  one  State, 
Territory,  or  District  of  Columbia  to  a  point  in  an- 
other State  or  Territory,  or  from  a  point  in  a  State 
or  Territory  to  a  point  in  the  District  of  Columbia, 
or  from  any  point  in  the  United  States  to  a  point  in 
Limitation  of  an  adjacent  foreign  country,  or  for  transportation 
c^used^  hT  car-  whoUy  withiu  a  Territory  shall  be  liable  to  the  law- 

rier  prohibited.     ^^^  ^^^^^^^  ^^  ^^^^^  ^^^^.^^  ^^.  ^-^^  ^^  ^^^^^^^  ^^  ^^  ^^^ 

party  entitled  to  recover  thereon,  whether  such  receipt 
or  bill  of  lading  has  been  issued  or  not,  for  the  full 
actual  loss,  damage,  or  injury  to  such  property  caused 
by  it  or  by  any  such  common  carrier,  railroad,  or 
transportation  company  to  which  such  property  may 
be  delivered  or  over  whose  line  or  lines  such  prop- 
erty may  pass  within  the  United  States  or  within  an 
adjacent    foreign    country    when    transported    on    a 
through  bill   of  lading,   notwithstanding   any  limi- 
tation of  liability  or  limitation  of  the  amount  of  re- 
covery or  representation  or  agreement  as  to  value  in 
any  such  receipt  or  bill  of  lading,  or  in  any  contract, 
rule,  regulation,  or  in  any  tariff  filed  with  the  Inter- 
state Commerce  Commission;  and  any  such  limita- 
tion, without  respect  to  the  manner  or  form  in  which 
it  is  sought  to  be  made  is  hereby  declared  to  be  un- 
lawful  and  void:   Provided,   Iwwever,   That   if   the 
Valuation  ai-  goods  are'  hidden  from  view  by  wrapping,  boxing,  or 
go^ds     are     so  other  meaus,  and  the  carrier  is  not  notified  as  to  the 
?hey  iannot^  be  character  of  the  goods,  the  carrier  may  require  the 
shipper  to  specifically  state  in  writing  the  value  of 
the  goods,  and  the  carrier  shall  not  be  liable  beyond 
the  amount  so  specifically  stated,  in  which  case  the 
Interstate  Commerce  Commission  may  establish  and 
maintain  rates  for  transportation,  dependent  upon  the 
value  of  the  property  shipped  as  specifically  stated 
in  writing  by  the  shipper.     Such  rates  shall  be  pub- 
lished as  are  other  rate  schedules:  Provided,  further, 
That  nothing  in  this  section  shall  deprive  any  holder 
of  such  receipt  or  bill  of  lading  of  any  remedy  or 
right  of  action  which  he  has  under  the  existing  law : 
Provided,  further.  That  it  shall  be  unlawful  for  any 
such  common  carrier  to  provide  by  rule,  contract, 
regulation,  or  otherwise  a  shorter  period  for  giving 


seen 


APPENDIX. 


525 


notice  of  claims  than  ninety  days  and  for  the  filing 
of  claims  for  a  shorter  period  than  four  months,  and 
for  the  institution  of  suits  than  two  years :  Provided, 
however,  That  if  the  loss,  damage,  or  injury  com- 
plained of  was  due  to  delay  or  damage  while  being 
loaded  or  unloaded,  or  damaged  in  transit  by  care- 
lessness or  negligence,  then  no  notice  of  claim  nor 
filing  of  claim  shall  be  required  as  a  condition  pre- 
cedent to  recovery. 

That  the  common  carrier,  railroad,  or  transporta- 
tion company  issuing  such  receipt  or  bill  of  lading 
shall  be  entitled  to  recover  from  the  common  carrier, 
railroad,  or  transportation  company  on  whose  line  the 
loss,  damage,  or  injury  shall  have  been  sustained  the 
amount  of  such  loss,  damage,  or  injury  as  it  may  be 
required  to  pay  to  the  owners  of  such  property,  as 
may  be  evidenced  by  any  receipt,  judgment,  or  tran- 
script thereof. 

Xo  suit  brought  in  any  State  court  of  competent 
jurisdiction  against  a  railroad  company,  or  other  cor- 
poration, or  person,  engaged  in  and  carrying  on  the 
business  of  a  common  carrier,  to  recover  damages  for 
delay,  loss  of,  or  injury  to  property  received  for  trans- 
portation by  such  common  carrier  under  section 
twenty  of  the  Act  to  regulate  commerce,  approved 
February  fourth,  eighteen  hundred  and  eighty-seven, 
as  amended  June  twenty-ninth,  nineteen  hundred  and 
six,  April  thirteenth,  nineteen  hundred  and  eight, 
February  twenty-fifth,  nineteen  hundred  and  nine, 
and  June  eighteenth,  nineteen  hundred  and  ten,  shall 
be  removed  to  any  court  of  the  United  States  where 
the  matter  in  controversy  does  not  exceed,  exclusive 
of  interest  and  costs,  the  sum  or  value  of  $3,000. 

Sec.  21.  (As  amended  March  2,  1889.)  That  the 
Commission  shall,  on  or  before  the  first  day  of 
December  in  each  year,  make  a  report,  which  shall  be 
transmitted  to  Congress,  and  copies  of  which  shall  be 
distributed  as  are  the  other  reports  transmitted  to 
Congress.  This  report  shall  contain  such  informa- 
tion and  data  collected  by  the  Commission  as  may  be 
considered  of  value  in  the  determination  of  questions 
connected  with  the  regulation  of  commerce,  together 
with  such  recommendations  as  to  additional  legisla- 
tion relating  thereto  as  the  Commission  may  deem 


Provisions  as 
to  time  for  giv- 
ing notice  of 
loss,  filing  claim 
and  bringing 
action. 


Initial  carrier 
may  have  re- 
course upon  car- 
rier responsible 
for  loss  or  dam- 
age. 


A  m  e  ndment 
of  January  20, 
1914. 


Annual  r  e  - 
ports  of  the 
Commission  t  o 
Congress. 


536  APPENDIX, 

necessary;  and  the  names  and  compensation  of  the 
persons  employed  by  said  Commission. 
Persons    and       gEC.  33.   (As  amended  March  2,  1889,  and  Feh- 
may^hl  carried  ruary  8,   1895.)      {^See  section   1,  5th   par.]     That 
ducU'^rates.  ''^"  nothing  in  this  Act  shall  prevent  the  carriage,  storage, 
or  handling  of  property  free  or  at  reduced  rates  for 
the  United  States,  State,  or  municipal  governments, 
or  for  charitable  purposes,  or  to  or  from  fairs  and 
expositions  for  exhibition  thereat,  or  the  free  car- 
riage of  destitute  and  homeless  persons  transported 
by  charitable  societies,  and  the  necessary  agents  em- 
Miieage,     ex-  ployed  in  such  transportation,  or  the  issuance  of  mile- 

cursion,  or  com-    i^     ■'  .  x-    1     4-„  . 

mutation     pas-  age,   excursiou,   or   commutation   passenger   tickets, 
senger  tickets.     ^^^^^^^^  ^^  ^j^-g  ^^^  ^i^^^n  i^g  construed  to  prohibit 

any  common  carrier  from  giving  reduced  rates  to 
ministers  of  religion,  or  to  municipal  governments  for 
the  transportation  of  indigent  persons,  or  to  inmates 
of  the  National  Homes  or  State  Homes  for  Disabled 
Volunteer  Soldiers,  and  of  Soldiers'  and  Sailors'  Or- 
phan Homes,  including  those  about  to  enter  and  those 
returning  home  after  discharge,  under  arrangements 
Passes    and  -^ith  the  boards  of  managers  of  said  homes;  nothing 
tfon  *to''offiJers  in  this  Act  shall  be  construed  to  prevent  railroads 
of  "^  r  aTft^n  from  giving  free  carriage  to  their  own  officers  and 
companies.  employees,  or  to  prevent  the  principal  officers  of  any 

railroad  company  or  companies  from  exchanging 
passes  or  tickets  with  other  railroad  companies  for 
Provisions  of  their  officcrs  and  employees ;  and  nothing  in  this  Act 
dition  "^to '  reme-  contained  shall  in  any  way  abridge  or  alter  the  reme- 
cimmon'^riw!  dlcs  now  cxistiug  at  common  law  or  by  statute,  but 
Tion'^not  affect^e'd  the  provisious  of  this  Act  are  in  addition  to  such 
by  Act.  remedies :  Provided,  That  no  pending  litigation  shall 

in  any  way  be  affected  by  this  Act :  Provided  further, 
Joint     inter-  That  nothing  in  this  Act  shall  prevent  the  issuance 
five  -  thousand-  of  joiut  interchangeable   five-thousand-mile   tickets, 
Amount  of'^^f^re^e  with  Special  privileges  as  to  the  amount  of  free  bag- 
baggage,  g^gg  ^-^^^  ^^y  ^g  carried  under  mileage  tickets  of  one 
thousand  or  more  miles.     But  before  any  common 
carrier,  subject  to  the  provisions  of  this  Act,  shall 
issue  any  such  joint  interchangeable  mileage  tickets 
with  special  privileges,  as  aforesaid,  it  shall  file  with 
the  Interstate  Commerce  Commission  copies  of  the 
joint  tariffs  of  rates,  fares,  or  charges  on  which  such 
joint  interchangeable  mileage  tickets  are  to  be  based, 


APPENDIX. 


527 


together  with  specifications  of  the  amount  of  free  bag- 
gage permitted  to  be  carried  under  such  tickets,  in 
the  same  manner  as  common  carriers  are  required  to 
do  with  regard  to  other  joint  rates  by  section  six  of 
this  Act;  and  all  the  provisions  of  said  section  six 
relating  to  joint  rates,  fares,  and  charges  shall  be 
observed  by  said  common  carriers  and  enforced  by 
the  Interstate  Commerce  Commission  as  fully  with 
regard  to  such  joint  interchangeable  mileage  tickets 
as  with  regard  to  other  joint  rates,  fares,  and  charges 
referred  to  in  said  section  six.  It  shall  be  unlawful 
for  any  common  carrier  that  has  issued  or  authorized 
to  be  issued  any  such  joint  interchangeable  mileage 
tickets  to  demand,  collect,  or  receive  from  any  person 
or  persons  a  greater  or  less  compensation  for  transpor- 
tation of  persons  or  baggage  under  such  joint  inter- 
changeable mileage  ticliets  than  that  required  by  the 
rate,  fare,  or  charge  specified  in  the  copies  of  the 
joint  tariff  of  rates,  fares,  or  charges  filed  with  the 
Commission  in  force  at  the  time.  The  provisions  of 
section  ten  of  this  Act  shall  apply  to  any  violation 
of  the  requirements  of  this  proviso. 

Sec.  23.  (Added  March  2,  1889.)  That  the  cir- 
cuit and  district  courts  of  the  United  States  shall 
have  jurisdiction  upon  the  relation  of  any  person  or 
persons,  firm,  or  corporation,  alleging  such  violation 
by  a  common  carrier,  of  any  of  the  provisions  of  the 
Act  to  which  this  is  a  supplement  and  all  Acts 
amendatory  thereof,  as  prevents  the  relator  from  hav- 
ing interstate  traffic  moved  by  said  common- carrier 
at  the  same  rates  as  are  charged,  or  upon  terms  or 
conditions  as  favorable  as  those  given  by  said  com- 
mon carrier  for  like  traffic  under  similar  conditions 
to  any  other  shipper,  to  issue  a  writ  or  writs  of  man- 
damus against  said  common  carrier,  commanding 
such  common  carrier  to  move  and  transport  the  traf- 
fic, or  to  furnish  cars  or  other  facilities  for  trans- 
portation for  the  party  applying  for  the  writ:  Fro^ 
vided,  That  if  any  question  of  fact  as  to  the  proper 
compensation  to  the  common  carrier  for  the  service 
to  be  enforced  .by  the  writ  is  raised  by  the  pleadings, 
the  writ  of  peremptory  mandamus  may  issue,  not- 
withstanding such  question  of  fact  is  undetermined, 
upon  such  terms  as  to  security,  payment  of  money 


Rates  to  be 
published,  filed, 
and  observed. 


Penalties. 


United  States 
courts  to  com- 
mand movement 
o  f  interstate 
traffic  or  the 
furnishing  o  f 
cars  or  other 
t  r  a  nsportation 
facilities. 


538  APPENDIX. 

into  the  court,  or  otherwise,  as  the  court  may  think 

proper,  pending  the  determination  of  the  question  of 

Remedy      i  s  f ^ct :   Provided,   That   the   remedy  hereby  given  by 

cumulative.  ./  ./     o  ^ 

writ  of  mandamus  shall  be  cumulative,  and  shall  not 
be  held  to  exclude  or  interfere  with  other  remedies 
provided  by  this  Act  or  the  Act  to  which  it  is  a  sup- 
plement. 

Oommission       g^c.  24.   (Added  June  29,  1906.)   That  the  Inter- 
to       consist       of  /-N  •  ■      1  1  1  n 

seven  members;  state  Commerce  Commission  is  hereby  enlarged  so  as 

terms;   salaries.     ,  .    ,      »  i  -n    ,  i. 

to  consist  ot  seven  members  with  terms  ot  seven  years, 

and  each  shall  receive  ten  thousand  dollars  compensa- 

Qualifications  ^ion   annually.     The   qualifications   of   the   Commis- 

01     Commission-  j  i 

ers.  sioners  and  the  manner  of  the  payment  of  their  sal- 

aries shall  be  as  already  provided  by  law.  Such  en- 
largement of  the  Commission  shall  be  accomplished 
through  appointment  by  the  President,  by  and  with 
the  advice  and  consent  of  the  Senate,  of  two  addi- 
tional Interstate  Commerce  Commissioners,  one  for 
a  term  expiring  December  thirty-first,  nineteen  hun- 
dred and  eleven,  one  for  a  term  expiring  December 
thirty-first,  nineteen  hundred  and  twelve.  The  terms 
of  the  present  Commissioners,  or  of  any  successor  ap- 
pointed to  fill  a  vacancy  caused  by  the  death  or  resig- 
nation of  any  of  the  present  Commissioners,  shall  ex- 
pire as  heretofore  provided  by  law.  Their  successors 
and  the  successors  of  the  additional  Commissioners 
herein  provided  for  shall  be  appointed  for  the  full 
terms  of  seven  years,  except  that  any  person  ap- 
pointed to  fill  a  vacancy  shall  be  appointed  only  for 
the  unexpired  term  of  the  Commissioner  whom  he 
shall  succeed.  Not  more  than  four  Commissioners 
shall  be  appointed  from  the  same  political  party. 


ELKINS  ACT  ^ 

An  Act  to  further  regulate  commerce  with  foreign 
nations  and  among  the  States. 

Be  it  enacted  hy  the  Senate  and  House  of  Repre- 
sentatives of  the  United  States  of  America  in  Con- 
Corporation  qress   assembled.    Sec.    1.   (As    amended   June   29, 

as  well  as  omcer    o  '  \ 

or  agent  liable.    1906.)     That  any  thing  done  or  omitted  to  be  done 

1  Approved  February  19,  190.3    (32  Statutes  at  Large,  847),  as  amended 
by  an  act  approved  June  29,  1906  (34  Statutes  at  Large,  584). 


APPENDIX. 


529 


by  a  corporation  common  carrier,  subject  to  the  Act 
to  regulate  commerce  and  the  Acts  amendatory 
thereof,  which,  if  done  or  omitted  to  be  done  by  any 
director  or  officer  thereof,  or  any  receiver,  trustee, 
lessee,  agent,  or  person  acting  for  or  employed  by 
such  corporation,  would  constitute  a  misdemeanor 
under  said  Acts  or  under  this  Act,  shall  also  be  held 
to  be  a  misdemeanor  committed  by  such  corporation, 
and  upon  conviction  thereof  it  shall  be  siibject  to  like 
penalties  as  are  prescribed  in  said  Acts  or  by  this 
Act  with  reference  to  such  persons,  except  as  such 
penalties  are  herein  changed.  The  willful  failure 
upon  the  part  of  any  carrier  subject  to  said  Acts 
to  file  and  publish  the  tariffs  or  rates  and  charges 
as  required  by  said  Acts,  or  strictly  to  observe  such 
tariffs  until  changed  according  to  law,  shall  be  a  mis- 
demeanor, and  upon  conviction  thereof  the  corpora- 
tion offending  shall  be  subject  to  a  fine  of  not  less 
than  one  thousand  dollars  nor  more  than  twenty  thou- 
sand dollars  for  each  offense;  and  it  shall  be  unlaw- 
ful for  any  person,  persons,  or  corporation  to  offer, 
grant,  or  give,  or  to  solicit,  accept,  or  receive  any 
rebate,  concession,  or  discrimination  in  respect  to  the 
transportation  of  any  property  in  interstate  or  for- 
eign commerce  by  any  common  carrier  subject  to 
said  Act  to  regulate  commerce  and  the  Acts  amenda- 
tory thereof  whereby  any  such  property  shall  by  any 
device  whatever  be  transported  at  a  less  rate  than  that 
named  in  the  tariffs  published  and  filed  by  such  car- 
rier, as  is  required  by  said  Act  to  regulate  commerce 
and  the  Acts  amendatory  thereof,  or  whereby  any 
other  advantage  is  given  or  discrimination  is  prac- 
ticed. Every  person  or  corporation,  whether  carrier 
or  shipper,  who  shall,  knowingly,  offer,  grant,  or  give, 
or  solicit,  accept,  or  receive  any  such  rebates,  con- 
cession, or  discrimination  shall  be  deemed  guilty  of 
a  misdemeanor,  and  on  conviction  thereof  shall  be 
punished  by  a  fine  of  not  less  than  one  thousand  dol- 
lars nor  more  than  twenty  thousand  dollars:  Pro- 
vided, That  any  person,  or  any  officer  or  director  of 
any  corporation  subject  to  the  provisions  of  this  Act, 
or  the  Act  to'  regulate  commerce  and  the  Acts 
amendatory  thereof,  or  any  receiver,  trustee,  lessee, 
agent,  or  person  acting  for  or  employed  by  any  such 


Penalty. 


Failure  o  f 
carrier  to  pub- 
lish rates  or  ob- 
serve tariffs  a 
misdemeanor. 


Penalty,  fine. 


Misdemeanor 
to  offer,  grant, 
give,  solicit,  ac- 
cept, or  receive 
any  rebate,  con- 
cession or  dis- 
crimination. 


Penalty,  fine 
o  r  imprison- 
ment, or  both. 


530  APPENDIX. 

corporation,  who  shall  be  convicted  as  aforesaid,  shall, 
in  addition  to  the  fine  herein  provided  for,  be  liable 
to  imprisonment  in  the  penitentiary  for  a  term  of 
not  exceeding  two  years,  or  both  such  fine  and  im- 
prisonment, in  the  discretion  of  the  court.  Every 
p  r  osecutions  violation  of  this  section  shall  be  prosecuted  in  any 

may    be    in    any  „      ^         ^^. ,-_,,,  ,        .  .       •    -\-    ,■  j? 

district  court  of  the  United  States  having  jurisdiction  o± 
transportation''  crimcs  withiu  the  district  in  which  such  violation 
P''^^''^-  was  committed,  or  through  which  the  transportation 

may  have  been  conducted;  and  whenever  the  offense 
is  begun  in  one  jurisdiction  and  completed  in  another 
it  may  be  dealt  with,  inquired  of,  tried,  determined, 
and  punished  in  either  jurisdiction  in  the  same  man- 
ner as  if  the  ofEense  had  been  actually  and  wholly 
committed  therein. 
Principals  are       jn  construing;  and  enforcing  the  provisions  of  this 

ijaVjip  for  3,ct>s  of  c  J. 

agents.  scction,  the  act,  omission,  or  failure  of  any  officer, 

agent,  or  other  person  acting  for  or  employed  by  any 
common  carrier,  or  shipper,  acting  within  the  scope 
of  his  employment,  shall  in  every  case  be  also  deemed 
to  be  the  act,  omission,  or  failure  of  such  carrier  or 
Rates  filed  or  shipper  as  well  as  that  of  the  person.     Whenever  any 

participated     in  ^  „,  .   ,      , ,        t     ,         ■     ,       ^  rN 

by  carrier  shall,  carrier  filcs  With  the  Interstate  Commerce  Commis- 
cl  rf^Tr /"^be  sion  OP  publishes  a  particular  rate  under  the  provis- 
deemed  legal.  .^^^  ^^  ^^^^  ^^^  ^^  regulate  commerce  or  Acts  amenda- 
tory thereof,  or  participates  in  any  rates  so  filed  or 
published,  that  rate  as  against  such  carrier,  its  offi- 
cers or  agents,  in  any  prosecution  begun  under  this 
Act  shall  be  conclusively  deemed  to  be  the  legal  rate, 
and  any  departure  from  such  rate,  or  any  offer  to  de- 
part therefrom,  shall  be  deemed  to  be  an  offense  un- 
der this  section  of  this  Act. 

Any  person,  corporation,  or  company  who  shall  de- 
liver property  for  interstate  transportation  to  any 
common  carrier,  subject  to  the  provisions  of  this  Act, 
or  for  whom  as  consignor  or  consignee,  any  such  car- 
rier shall  transport  property  from  one  State,  Terri- 
tory, or  the  District  of  Columbia  to  any  other  State, 
Territory,  or  the  District  of  Columbia,  or  foreign 
country,  who  shall  knowingly  by  employee,  agent, 
officer,  or  otherwise,  directly  or  indirectly,  by  or 
through  any  means  or  device  whatsoever,  receive  or 
accept  from  such  common  carrier  any  sum  of  money 
or  any  other  valuable  consideration  as  a  rebate  or 


APPENDIX. 


531 


offset  against  the  regular  charges  for  transportation 
of  such  property,  as  fixed  by  the  schedules  of  rates 
provided  for  in  this  Act,  shall  in  addition  to  any  pen- 
alty provided  by  this  Act  forfeit  to  the  United  States 
a  sum  of  money  three  times  the  amount  of  money  so 
received  or  accepted  and  three  times  the  value  of  any 
other  consideration  so  received  or  accepted,  to  be 
ascertained  by  the  trial  court ;  and  the  Attorney  Gen- 
eral of  the  United  States  is  authorized  and  directed, 
whenever  he  has  reasonable  grounds  to  believe  that 
any  such  person,  corporation,  or  company  has  know- 
ingly received  or  accepted  from  any  such  common 
carrier  any  sum  of  money  or  other  valuable  considera- 
tion as  a  rebate  or  offset  as  aforesaid,  to  institute  in 
any  court  of  the  United  States  of  competent  jurisdic- 
tion a  civil  action  to  collect  the  said  sum  or  sums  so 
forfeited  as  aforesaid;  and  in  the  trial  of  said  action 
all  such  rebates  or  other  considerations  so  received 
or  accepted  for  a  period  of  six  years  prior  to  the  com- 
mencement of  the  action,  may  be  included  therein, 
and  the  amount  recovered  shall  be  three  times  the 
total  amount  of  money,  or  three  times  the  total  value 
of  such  consideration,  so  received  or  accepted,  or  both, 
as  the  case  may  be. 

Sec.  2.  That  in  any  proceeding  for  the  enforce- 
ment of  the  provisions  of  the  statutes  relating  to  in- 
terstate commerce,  whether  such  proceedings  be  insti- 
tuted before  the  Interstate  Commerce  Commission  or 
be  begun  originally  in  any  circuit  court  of  the  United 
States,  it  shall  be  lawful  to  include  as  parties,  in  ad- 
dition to  the  carrier,  all  persons  interested  in  or  af- 
fected by  the  rate,  regulation,  or  practice  under  con- 
sideration, and  inquiries,  investigations,  orders,  and 
decrees  may  be  made  with  reference  to  and  against 
such  additional  parties  in  the  same  manner,  to  the 
same  extent,  and  subject  to  the  same  provisions  as 
are  or  shall  be  authorized  by  law  with  respect  to  car- 
riers. 

Sec.  3.  That  whenever  the  Interstate  Commerce 
Commission  shall  have  reasonable  ground  for  belief 
that  any  common  carrier  is  engaged  in  the  carriage 
of  passengers  or  freight  traffic  between  given  points 
at  less  than  the  published  rates  on  file,  or  is  commit- 
ting any  discriminations  forbidden  by  law,  a  petition 


F  n  r  f  e  iture 
may  be  enforced 
against  receiv- 
ers of  rebates. 


Persons  inter- 
ested in  matters 
involved  1  n 

cases  before  In- 
terstate Com- 
merce Commis- 
sion or  cir- 
cuit court  may 
be  made  parties 
and  shall  be 
subject  to  or- 
ders or  decrees. 


Court  may  re- 
strain depar- 
tures from  pub- 
lished rates  or 
any  discrimina- 
tion prohibited 
by  law. 


532  APPENDIX. 

may  be  presented  alleging  such  facts  to  the  circuit 
court  of  the  United  States  sitting  in  equity  having 
jurisdiction;  and  when  the  act  complained  of  is  al- 
leged to  have  been  committed  or  as  being  committed 
in  part  in  more  than  one  judicial  district  or  State,  it 
may  be  dealt  with,  inquired  of,  tried,  and  determined 
in  either  such  judicial  district  or  State,  whereupon  it 
shall  be  the  duty  of  the  court  summarily  to  inquire 
into  the  circumstances,  upon  such  notice  and  in  such 
manner  as  the  court  shall  direct  and  without  the 
formal  pleadings  and  proceedings  applicable  to  ordi- 
nary suits  in  equity,  and  to  make  such  other  persons 
or  corporations  parties  thereto  as  the  court  may  deem 
necessary,  and  upon  being  satisfied  of  the  truth  of  the 
allegations  of  said  petition  said  court  shall  enforce  an 
observance  of  the  published  tariff's  or  direct  and  re- 
quire a  discontinuance  of  such  discrimination  by 
proper  orders,  writs,  and  process,  which  said  orders, 
writs,  and  process  may  be  enforceable  as  well  against 
the  parties  interested  in  the  traffic  as  against  the  car- 
rier, subject  to  the  right  of  appeal  as  now  provided 
by  law.  It  shall  be  the  duty  of  the  several  district 
attorneys  of  the  United  States,  whenever  the  Attor- 
ney General  shall  direct,  either  of  his  own  motion  or 
upon  the  request  of  the  Interstate  Commerce  Com- 
mission, to  institute  and  prosecute  such  proceedings, 
and  the  proceedings  provided  for  by  this  Act  shall 
not  preclude  the  bringing  of  suit  for  the  recovery  of 
damages  by  any  party  injured,  or  any  other  action 
provided  by  said  Act  approved  February  fourth, 
eighteen  hundred  and  eighty-seven,  entitled  "  An 
Court     may  Act  to  regulate  commerce"  and  the  Acts  amendatory 

compel      attend-  o  -^ 

ance  and  testi-  thereof.     And  in  proceedings  under  this  Act  and  the 
nesses  and  pro-  Acts  to  regulate  commerce  the  said  courts  shall  have 

duction  of  books    ,^  ,  i   j  i  i  i        -i  c       -j.  i     j.u 

and  papers.  the  power  to  compcl  the  attendance  ot  witnesses,  botn 
upon  the  part  of  the  carrier  and  the  shipper,  who 
shall  be  required  to  answer  on  all  subjects  relating 
directly  or  indirectly  to  the  matter  in  controversy, 
and  to  compel  the  production  of  all  books  and  papers, 
both  of  the  carrier  and  the  shipper,  which  relate  di- 
rectly or  indirectly  to  such  transaction ;  the  claim  that 
Immunity.  g^Qj^  testimony  or  evidence  may  tend  to  criminate  the 
person  giving  such  evidence  shall  not  excuse  such  per- 
son from  testifying  or  such  corporation  producing  its 


APPENDIX. 


533 


books  and  papers,  but  no  person  shall  be  prosecuted 
or  subjected  to  any  penalty  or  forfeiture  for  or  on 
account  of  any  transaction,  matter,  or  thing  concern- 
ing which  he  may  testify  or  produce  evidence  docu- 
mentary or  otherwise  in  such  proceedings:  Provided, 
That  the  provisions  of  an  Act  entitled  "  An  Act  to 
expedite  the  hearing  and  determination  of  suits  in 
equity  pending  or  hereafter  brought  under  the  Act 
of  July  second,  eighteen  hundred  and  ninety,  entitled 
'  An  Act  to  protect  trade  and  commerce  against  un- 
lawful restraints  and  monopolies,'  '  An  Act  to  regu- 
late commerce,'  approved  February  fourth,  eighteen 
hundred  and  eighty-seven,  or  any  other  acts  having 
a  like  purpose  that  may  be  hereafter  enacted,  ap- 
proved February  elevenths,  nineteen  hundred  and 
three,"  shall  apply  to  any  case  prosecuted  under  the 
direction  of  the  Attorney  General  in  the  name  of  the 
Interstate  Commerce  Commission. 

Sec.  4.  That  all  Acts  and  parts  of  Acts  in  conflict 
with  the  provisions  of  this  Act  are  hereby  repealed, 
but  such  repeal  shall  not  affect  causes  now  pending 
nor  rights  which  have  already  accrued,  but  such 
causes  shall  be  prosecuted  to  a  conclusion  and  such 
rights  enforced  in  a  manner  heretofore  provided  by 
law  and  as  modified  by  the  provisions  of  this  Act. 

Sec.  5.  That  this  Act  shall  take  effect  from  its  pas- 
sage. 


E  X  p  e  diting 
Act  of  Feb.  11, 
1903,  to  apply 
in  cases  prose- 
cuted under  di- 
rection of  At- 
torney General 
in  name  of  In- 
terstate Com- 
merce Commis- 
sion. 


Conflic  ting 
laws  repealed. 


INDEX. 

[References  are   to  pages.] 


ADEQUATE   FACILITIES, 

no  duty  to  serve  if  iun  is  full,  393,  394. 

what  facilities  innkeeper  must  furnish,  394-396. 

guest  has  no  right  to  particular  room,  396. 

carrier  receiving  no  franchise  not  bound  to  increase  facilities,  30i. 

water  company  must  furnish  adequate  pressure,  398.  399.  ^^^ 

telegraph  company,   not  having,   must  string  more  wires,  400-40-. 

duty  of  water  works  to  extend  service  to  new  district,  40.-iOo. 

toll   service   does   not   constitute,    in   case   of    telephone   company. 

405-4^9 
railroads  must  'furnish  rolling-stock   for  ordinary  traffic,  409-414. 
special  cars  for  perishable  goods,  414,  415. 
Pullman  and  dining  service,  416-419. 
duty    of    railroads    to   establish    stations,   419-426. 

under  statute,  427-430. 
duty  with  regard  to  switch  connections,  431^36. 

under  statute,   436-140. 
courteous  treatment,  441-444. 
ASSOCIATED    PRESS, 
duty  to  serve,  72-86. 

B. 

BASES  OF  PUBLIC  SERVICE  DUTIES, 

common  callings,  1-10. 
exercise  of  franchises,  10-30. 
legislation,  31-65. 
economic  monopoly,  66-86. 

c. 

CAPITAL.     See  Rates. 

CATTLE, 

duty  of  railroad  to  carry,  100,  lOln. 

COLOR, 

refusal  to  serve  because  of,  141. 

COMMODITIES  CLAUSE, 

applied,  164—167. 
COMMON  CALLINGS, 

duty  of  those  engaged  in.  to  use  care,  1. 

duty  of  those  engaged  in,  to  serve,  2-10. 

535 


536  INDEX. 

[References  are   to  pages.] 
COMMON  CALLINGS   {continued). 

who   were  anciently  engaged  in,  3,  8n. 

innkeepers,  2,  3,  4,  Sn. 

smitlis,  2,  3,  8n. 

tailors,  3. 

common  carriers,  3,  6n,  8n. 
criminal  liability  of,  for  refusal  to  serve,  4. 
survivors  of  those  engaged  in,   8n. 
physicians   not   now   engaged   in,   8n. 
Pullman  service  as  a,  9. 
telephone  service  as  a,  10. 
COMMON  CARRIERS.     See  Railkoads. 
duty  to  serve,  3,  6n. 
who  are,  8n,  87. 
pipe-lines  as,  62-65. 

what  service  must  be  rendered  by,  87-94,  96-128. 
who  must  be  served  and  excuses  for  refusal  to  serve,  137-150. 
Commodities  Clause  of  Interstate  Commerce  Act,  164-167. 
rules  for  the  service,   168-186,  191-200. 
rates  fixed  by,  212-217. 

State's  power  to  fix  rates  and  its  delegation,  220-227. 
limitation  on   State's  power  to  fix  rates,  238-259,  263-265. 
operating  expenses  and  maintenance,  265-270,  272,  276-288. 
valuation  for  rate  purposes,  288-292,  297-301,  318-321,  324^326. 
discrimination,  338-382,  384-392. 
adequate  facilities,  397,  409-440. 
withdrawal  from   service,  447-461,  472^75. 

COST  OF  PRODUCTION  LESS   DEPRECIATION, 

as  evidence  of  present  value,  297-301,  304,  308,  309. 

COTTON  PRESS  COMPANY, 
duty  to  serve,  66-71. 

D. 

DEPRECIATION, 

maintenance  and,  277-281. 
making  good  past,  283. 
DISCRIMINATION, 
in  service  rendered, 

illegal    at   common    law,   335-3.38. 

distribution    of    rolling-stock,    362-364. 

prorating  of  cars,  364-371. 
in  rates, 

legal   at  common   law,   338-341. 

as  evidence  of  unreasonable  i-ates,  341-344. 

illegal   at  common  law%  344^347. 

under  Interstate  Commerce  Act,  348,  349. 

party  rates,  349-3.52. 

based   upon  the  amount  of  shipment,  352-355. 

competition  as  justifying,  under  sec.  2  of  the  Interstate  Com- 
merce Act,  35,5-357. 
Under  sees.  3  and  4,  357-362. 


INDEX.  537 

[References  are  to  pages.] 
DISCRIMINATION  (continued). 

demanding   prepayment   of   one   and   giving   credit   to   otliers, 

371-375. 
between  owners  and  forwarding  agents,  375-380. 
in  favor  of  one  shipping  finished  product,  380-382. 
in  favor  of  one  agreeing  to  give  entire  business  to  carrier,  382. 
based  upon  different  uses  of  the  commodity,  383. 
free  pass  in  exchange  for  advertising,  384-387. 
payment  to  shipper  for  services  due  from  carrier,  388-392. 
DISTRIBUTION  OF  ROLLING-STOCK, 

to  avoid  illegal  discrimination,  362-3G4. 
DUTY  TO  SERVE  PUBLIC, 

common  calling  as  basis  of,  1-10. 
exercise  of  franchise  as  basis  of,  10-30. 
legislation  as  basis  of,  31-65. 
economic  monopoly  as  basis  of,  6&-86. 

E. 

ECONOMIC  MONOPOLY, 

as  ground  for  legislative  regulation  of- rates,  35-37,  46,  52,  56. 

duty  of  those  exercising,  to  serve,  66-86. 
ELECTRIC  COMPANIES, 

duty  to  serve,  20n,  23. 

may  be  granted  franchises,  20n,  22. 

valuation  for  rate  purposes,  301-303. 

withdrawal   of,  because  unreasonable  rates  are  imposed,  464r466. 

ELKINS  ACT,  528-533. 

EMINENT  DOMAIN, 

purposes  for  which,  may  be  granted,  lln,  13. 

water  company  as  recipient  of  grant  of,  11,  13. 

duty  of  one  exercising,  to  serve,  12,  13. 

use  of  street  under,  17. 

electric  company  as  recipient  of  grant  of,  20. 

gas  company  as  recipient  of  grant  of,  20n. 

railroads  as  recipients  of  grants  of,  97. 

EXCUSES  FOR  REFUSAL  TO  SERVE, 

illegality,  138,  150. 

unpaid  charges,  139,  152n,  154,  156n. 

strike,  139. 

color,  141. 

ticket  scalping,  143. 

intoxication,  145,  147. 

disease,  146. 

danger  to  the  would-be  patron,  148-150. 

nonresidence,  152-154. 

limited  supply,  156-160. 

EXPRESS  COMPANIES, 

railroads'  duty  to  furnish  facilities  to,  112-122. 

are  common  carriers,  117,  138. 

illegality  of  shipment  as  excuse  for  refusal  to  serve,  138. 


538  -  INDEX. 

[References   are   to   pages.] 

F. 

FORFEITURE  OF  FRANCHISE, 

proper  action  for,  476-479. 
FRANCHISE, 

what  is  a,  lOn. 

duty  of  one  exercising,  to  serve,  10-30. 

who  may  exercise,  12,  13,  IS,  20n,  22. 

eminent  domain  is,  17,  18,  20n. 

use  of  streets  is,  17. 

legal  monopoly  is,  27. 

receipt  of,  as  affecting  service  to  be  rendered  by  common  carrier, 

98-100. 
value  of,  for  rate  regulation,  301-303. 
duration  of  indefinite,  and  right  to  abandon  it,  461-463. 
right  to  transfer,  466-471. 

G. 

GAS  COMPANIES, 

may  be  granted  franchises,  14,  20n. 

duty  to  serve,  14,  16,  20n. 

what  service  must  be  rendered,  134. 

unpaid  charges  for  piping  as  ground  for  refusal  to  serve,  155. 

unpaid  charges  for  former  service  as  ground  for  refusal  to  serve, 

156n. 
limited  supply  of  natural  gas  as  ground  for  refusal  to  sei've,  156-160. 
rules  for  the  service,  201-203. 

legislative  delegation  of  rate  fixing  power,  227-231. 
operating  expenses  and  maintenance,  274—276. 
valuation  for  rate  purposes,  322,  323. 
return  which  should  be  earned,  328. 
discrimination,  383. 
proper  action  against,  for  forfeiture  of  franchises,  476-479. 

GOING  CONCERN, 

as  element  of  value  for  rate  regulation,  309-315. 

GRAIN  ELEVATORS, 

legislative  regulation  of  rates  of,  31-56. 


ILLEGALITY, 

service  may  not  be  required  to  further,  138,  144,  150. 

IMPROVEMENTS, 

whether  to  be  distinguished  from  maintenance,  277-281. 
projecting  cost  of,  281. 
INNKEEPERS, 

duty  to  serve,  4. 

who  are,  8n,  95. 

service  to  be  rendered,  95. 

who  must  be  served,  6-8,  135-137. 

adequate  facilities,  393-396. 

withdrawal  from  public  service,  445. 


INDEX.  539 

[References   are   to  pages.] 
INSUFFICIENT  SUPPLY, 

refusal  to  supply  natural  gas  because  of,  156-160. 
INSURANCE  COMPANIES, 

legislative  regulation  of  rates,  57-61. 
INTEREST  DURING  CONSTRUCTION, 

as  element  of  value  for  rate  regulation,  306. 
INTERSTATE  COMMERCE  ACT.     Text  of  Act,  481-528. 

pipe-lines  are  carriers  under,  62-65. 

Commodities  Clause  of,  16-1-167. 

discrimination  is  illegal  under,  348,  349. 

party  rates  legal  under,  349-352. 

competition  under  sec.  2  of,  355-357. 
under  sees.  3  and  4  of,  357-362. 
INTERSTATE  COMMERCE  COMMISSION, 

power  to  fix  rates,  231-237. 
IRRIGATION  COMPANIES, 

duties  to  the  public,  20n. 
INVESTMENT, 

importance  of,  in  rate  cases,  290,  296. 

L. 

LAND  VALUE, 

in  rate  regulation,  318-323. 
LEGAL  MONOPOLY, 

duty  of  those  exercising,  to  serve,  27-30. 
LEGISLATION, 

public  service  duties  imposed  by,  31-65. 

as  to  rate  regulation,  220-334. 

M. 
MONOPOLY.     See  Economic  Monopoly,  Legal  Monopoly. 

0. 

OPERATING  EXPENSES.    See  Rates. 


PIECEMEAL  CONSTRUCTION, 

as  affecting  value  for  rate  regulation,  306. 

PIPE-LINES. 

as  common  carriers,  62-65. 

POLICE  POWER, 

regulation  of  rates  under,  31-61. 

PRORATING  CARS, 

to  avoid  illegal  discrimination,  364-371. 
PULLMAN  CAR  COMPANIES. 

engaged  in  a  common  calling,  9. 
duty  to  serve,  9. 


540  INDEX. 

[References  are  to  pages.] 

Q. 

QUO  WARRANTO, 

proper  action  for  forfeiture  of  franchise,  476-479. 


R. 

RAILROADS, 

are  common  carriers,  98. 

wliat  goods  must  be  carried,  96-102. 

duty  to  carry  cattle,  100,  lOln. 

dogs,  lOln. 

explosives,  lOln. 

money  as  freight,  lOln. 

cars  of  other  railroads,  102n. 

show  cars,  102. 
where  delivery  should  be  made,  103-106. 
where  goods  should  be  received,  105. 
no  duty  to  carry  beyond  own  line,  106. 
duty  to  enter  into  through  service  agreement,  107-112. 
duty  to  give  facilities  to  all  express  companies,  112-122. 

to  cab  and  transfer  men,  123-128. 
refusal  to  serve  because  of  unpaid  back  charges,  139. 

strilve,  139. 

color,  141. 

ticket  scalping,  143. 

illegal  purpose  of  patron,  144. 

intoxication,  145,  147. 

disease,  146. 

danger  to  would-be  patron,  148-150. 
rules  may  be  made  for  the  service,  168-172. 
right  to  change  rules,  171,  176-178. 
necessity  of  notice  of  rules,  173-186. 

examples  of  rules,  169,  173,  175,  177,  179,  186,  191,  193,  196,  198. 
breach  of  rules  through  fault  of  company's  servant,  193-198. 
basis  of  rate  fixing  by  company,  212-217. 
State's  power  to  fix  rates,  220-222. 

delegation  of,  222-227,  231-237. 
courts  may  review  rates  under  Equal  Protection  and  Due  Process 

Clauses,  238-250. 
right  to  review  individual  rates  in  a  schedule,  250-259. 
when  State  by  contract  is  precluded  from  fixing  rates,  259,  263-265. 
operating  expenses  and  maintenance,  265-270,  272,  276-288. 
valuation  for  rate  purposes,  288-292,  297-301,  318-321,  324-326. 
discrimination,  338-382,  384-392. 
adequate  facilities,  409-440. 

as  to  duty  of,  to  finish  partly  constructed  road,  447^50. 
withdrawal  from  service,  450-461. 
right  of  relocation  after  construction,  472-475. 

RATE  OF  RETURN, 

in  legislative  rates,  826-334. 


INDEX.  ^^^ 


[References  are   to  pages.] 

^'^'^fi^ed  bv  one  engaged  in  public  service,  212-220. 
courts  bave  no  right  to  fix,  219,  220n. 
power  of  State  to  fix  rates,  220-222. 
delegation  of,  222-231. 
under  Interstate  Commerce  Act,  231-2d(_. 
looriciqtive  rates  must  not  be  confiscatory,  2.:,<-2b;j.  _       „  ^ 

court  may  4"ew  rates  under  Equal  Protection  and  Due  Process 

Clauses,  238-250.  o-r^o-Q 

right  to  review  individual  rates  in  a  schedule   2o(>-2o9^ 
when  State  by  contract  is  precluded  from  txmg,  2o9-26o. 
operating  expenses  and  maintenance,  2bo---88^_ 

necessity  and  cUfficulty  of  determining.  26o-2G8. 
must  be  shown  not  to  be  extravagant,  268,  269.  ^ 

injury  caused  by  employee's  negligence  as,  20J. 
expense  of  getting  business  as,  270. 
sinking  fund  to  pay  debts  as,  271. 
interest  on  bonds  as,  272. 
depreciation,  maintenance  and  administration  cost,  2(3--7b. 
maintenance  and  improvements,  277-281. 
projecting  cost  of  improvements  over  several  yeais,  281. 
making  good  past  depreciation,  283. 
apportioning  expenses,  28-1-288.  o«Q_wfi 

capital  upon  which  a  return  should  be  earned,  28^326. 
importance  of  condemnation  cases  in  fixing   289^ 
importance  of  amount  invested  m  fixing,  290,  296. 
interstate  and  intrastate,  291. 
present  value  as.  293-296. 
market  value  as,  296n. 

elements  of  evidence  in  determining,  297,  349^ 
cost  of  reproduction  less  depreciation  as   29<-301,  304,  808,  309. 
value  of  franchise  in  determining,  30l-3Ud. 
piecemeal  construction  as  affecting  306. 
interest  during  construction  as  part  of,  30b. 
working  capital  as  part  of,  307. 

going  concern  value  as  part  of,  309-315.  _,.„.« 

when  too  large  an  investment  has  been  made,  316-318. 
increase  in  land  value  as  part  of,  31S-6Z6. 

invested  surplus  as  part  of,  323.  hn^ines*;  3''4-326 

apportionment  of,  to  different  branches  of  the  business,  3-4-d-b. 
rate  of  return  which  should  be  allowed,  32b-334. 

RELOCATION.  ,        ^^o  vi-r. 

right  of,  after  construction,  4(2-4(5. 

RESIDENT,  .        ,^<,  ..^ 

only  has  right  to  water  service,  152-154. 

RIGHT  TO  SERVE  THEMSELVES, 
aside  from  statute,  160-163. 
under  Commodities  Clause,  164-167. 

RULES  FOR  THE  SERVICE, 

general  right  to  make,  171-1*2,  201. 

notice  of,  173-190. 

as  to  loading  coal,  168-172. 


54:2  INDEX, 

[References  are   to  pages.] 
RULES  FOR  THE  SERVICE   {continued). 

as  to  place  where  transfer  is  good,  173,  174. 

as  to  through  tickets,  175,  176. 

that  ticket  shall  be  bought  before  boarding  train,  177,  178. 

as  to  time  when  ticket  must  be  used,  179. 

as  to  trains  upon  which  ticket  may  be  used,  185,  186. 

as  to  time  limit  for  filing  claim,  186-190. 

forbidding  sleeping  in  waiting  room,  191-193. 

breach  of,  through  fault  of  company's  servant,  193-198. 

requiring  payment  of  extra  amount  on  trains,  193-195. 

requiring  that  ticket  be  shown,  195-198. 

as  to  bill  which  must  be  changed,  198-200. 

against  waste  of  water,  200. 

requiring  a  deposit,  202. 

reserving  right  of  inspection  of  fixtures,  202. 

reserving  right  to  cut  off  service  at  discretion,  202. 

as  to  telegraph  free  delivery  limits,  204—206. 

requiring  prepayment  of  answer  to  telegram  tendered,  206-210. 

requiring  patron  to  pay  for  piping  to  house,  210,  211. 

s. 

SERVICE  TO  BE  RENDERED, 

what  service  must  be  rendered,  87-135. 

who  must  be  served,  135-160. 

right  of  public  service  companies  to  serve  themselves,  160-167. 
SHOW  CARS, 

duty  of  railroad  to  haul,  102. 
STEAMSHIP  COMPANIES, 

as  common  carriers,  90. 

not  bound  to  increase  facilities,  397. 
STOCKYARDS, 

legislative  regulation  of  rates  of,  57n. 

duty  to  serve,  72n. 

rate  of  return  which  should  be  allowed  to,  331-334. 
STREETS, 

duty  of  those  using,  to  serve,  14,  19. 

use  of,  as  a  franchise,  17. 
STRIKE, 

as  excuse  for  refusal  to  serve,  139. 
SURPLUS, 

invested,  as  an  element  in  value,  323. 

TAXATION,  '^• 

aid  through,  imposes  duty  to  serve,  30n. 
TELEGRAPH  COMPANIES, 
duty  to  serve,  129. 

message  destined  for  point  beyond  line  of,  129. 
rule  as  to  time  limit  for  filing  claim  against,  186-190. 
rules  as  to  free  delivery  limits,  204-206. 
rule   of,    requiring   prepayment   of   answer   to    telegram    tendered, 

206-210. 
adequate  facilities,  400-402,  441-444. 


INDEX.  543 

[References  are   to  pages.] 
TELEPHONE  COMPANIES, 

engaged  in  a  common  calling,  10. 

duty  to  serve,  10. 

connecting  service  compelled  by  eminent  domain,  130n. 

message  destined  for  point  beyond  line  of,  130. 

rigbt  of  telegraph  company  to  service  of,  131-134. 

illegality  of  patron's  business  as  ground  for  refusal  to  serve,  150. 

back  charges  unpaid  as  ground  for  refusal  to  serve,  152n. 

right  of  city  to  contract  away  power  to  fix  rates  of,  260-2G3. 

valuation  for  rate  purposes,  304-312. 

adequate  facilities,  405—109. 

right  to  transfer  franchise,  4G6-471. 
THROUGH  SERVICE, 

duty  to  enter  into,  107-112. 
TOBACCO  WAREHOUSES, 

legislative  regulation  of  rates  of,  57n. 

u. 

UNPAID  CHARGES. 

carriers  refusal  to  serve  based  upon,  139. 

telephone  company's  refusal  to  serve  based  upon,  152n. 

gas  company's  refusal  to  serve  based  upon,  154,  156n. 


VALUE, 

evidence  as  to.  249. 

present,  293-296. 

market,  296n. 

cost  -of  reproduction  less  depreciation  as  measure  of,  297-801,  304, 

308,  309. 
franchise,  301-303. 
land,  318-323. 

w. 

WAGON  CARRIER, 

may  withdraw  from  public  service  at  pleasure,  445. 

WAREHOUSES, 

exercising  legal  monopoly  must  serve,  24-30. 
regulation  of  rates  of,  31-57. 
owners  of,  cannot  serve  themselves,  160-163. 
WATER  COMPANIES, 

may  be  granted  franchises,  12,  14,  19. 

duty  to  serve,  12,  13,  19. 

who  must  be  served  by,  152-154. 

rules  for  the  service  of,  200,  210. 

basis  of  rate  fixing  by,  217-220. 

operating  expenses  and  maintenance,  271,  273. 

valuation  for  rate  purposes,  293-296,  316-318,  323. 

going  value  of,  313-315. 

return  which  should  be  earned  by,  326-328,  329-331. 

adequate  service,  398,  399,  402^05. 


544  INDEX. 

[References  are   to  pages.] 
WITHDRAWAL  FROM  PUBLIC  SERVICE, 

by  innkeeper,  445. 

by  wagon  carrier,  445. 

by  one  put  under  public  service  duties  by  statute,  446n. 

no  duty  to  complete  partly  constructed  railway,  447-450. 

railway's  discontinuing  service  on  part  of  line,  450-458. 

wben  no  injury  is  caused  to  the  public,  458-461. 

duration  of  indefinite  franchise  and  right  to  abandon,  461-463. 

unreasonable  statutory  rates  as  ground  for,  464-466. 

right  to  transfer  franchise,  466-471. 

right  of  relocation  after  construction,  472-475. 

proper  action  for  forfeiture  of  franchise,  476^79. 
WORKING  CAPITAL, 

as  an  element  of  value  for  rate  regulation,  307. 


LAW  LIBRARY 
UNIVERSITY  OF  CALIFORNIA 


